Will CMS' Aggressive Approach to MA Audits Affect Provider Revenue Cycles?

A recent CMS announcement signals a more aggressive approach to auditing Medicare Advantage plans. Revenue cycle leaders should be prepared for the ripple effects.

The Centers for Medicare & Medicaid Services (CMS) is taking a more aggressive approach to Medicare Advantage (MA) plan audits, according to a recent announcement. While MA payers will feel the direct impact of increased regulatory scrutiny, ripple effects could put significant pressure on provider revenue cycles.

Why providers may feel the pinch

Increased oversight seems set to focus most intensely on risk-adjustment data validation (RADV), which confirms medical records support diagnoses used for patients. Noting in its recent announcement that the Medicare Payment Advisory Committee estimates MA plans overbill the government by up to $43 billion per year, CMS seems intent on recouping at least some of those costs.

Increased oversight over MA plans will likely translate to heightened scrutiny for providers, who are the source of clinical documentation and coding that underpins plan payments, as payers look to safeguard their positions.

Key pressure points for revenue cycle leaders

The downstream effects of MA plan audits may be felt in several areas of revenue cycle operations.

• Increased Administrative Burden and Scrutiny Over Documentation: Providers should anticipate a surge in medical record requests from MA plans. Payers will likely conduct more detailed chart reviews and issue more coding queries to validate diagnoses, although many providers have been preparing for this since CMS issued a final rule on RADV audits in 2023.
• Heightened Risk of Payment Recoupments and Denials: Payers facing recoupments from CMS due to audit findings may become more aggressive in their own post-payment reviews of provider claims.Providers participating in risk-sharing arrangements are especially exposed to recoupments, as Sabrina Skeldon wrote for an American Bar Association article last year.
• Stricter Prior Authorization and Utilization Management: To mitigate their audit risk, payers could introduce more restrictive prior authorization and utilization management protocols, further adding to the administrative burden and potentially leading to more delays and denials.

There are several strategies revenue cycle leaders can adopt to prepare for heightened scrutiny over government payments to MA plans.

• Fortifying clinical documentation and coding practices;
• Ramping up internal audits and compliance programs; and
• Reviewing MA plan contracts for details on audits, recoupments, and record requests.

Additional details from the CMS announcement

CMS will now audit all MA plans annually, which amount to approximately 550 audits, rather than the 60 or so it currently audits each year. Additionally, CMS will increase the number of records it reviews per plan from 35 per year to between 35 and 200 per year depending on the plan size. CMS is also aiming to clear out its backlog of audits from payment years 2018 to 2024.

CMS intends to accomplish this increased workload by leveraging technology and increasing its staff of medical coders from 40 to approximately 2,000.

CMS’ renewed commitment to stricter oversight of MA plans could signal a rocky road ahead. However, by focusing on documentation integrity, strengthening internal compliance, and carefully managing payer relationships and contracts, revenue cycle leaders can protect their organization's financial stability.