Best Practices for Conducting Risk Adjustment Audits in Healthcare

Background

An OIG audit revealed that a Medicare Advantage organization received $54.3 million in overpayments due to invalidated HCC codes. Consequently, the health plan was tasked to refund these overpayments.

In this blog, we will delve into the significance of healthcare audits for risk adjustment, CMS’s monitoring through RADV, and the roles of OIG and DOJ. Additionally, we will explore how AI-driven health technology enhances best practices, ensuring coding accuracy, documentation integrity, and compliance, thereby improving revenue and care quality through compliant audit procedures.

Audit Heat Soars: More Rigorous Audits Coming to Medicare Advantage

Medicare Advantage payment models reimburse providers based on patient condition complexity, which can lead to over-reporting diagnoses for higher payments. To address this, CMS and insurers conduct thorough audits to detect improper coding and recover overpayments.

The CMS final rule on Risk Adjustment Data Validation (RADV), effective February 1, 2023, significantly enhances oversight of MA plans, increasing audit frequency and liability for MA plans and providers. This heightened scrutiny makes audits a top priority for risk adjustment stakeholders.

Financial and Compliance Implications

Medicare Advantage organizations face substantial financial losses due to incorrect HCC coding and resulting regulatory penalties. Healthcare audits are crucial for accurate documentation and coding, preventing overpayments and fraud. The DOJ targets fraudulent activities involving improper coding. With CMS eliminating the RAF and FFSA adjustments, which allowed some payment errors, MA plans must prepare for more rigorous audits and ensure all claims are fully supported by medical records to avoid increased financial impact.

Guardians of Compliance & Regulatory Enforcements

CMS relies on several agency audits to implement its policies and regulations, including:

• RADV (Risk Adjustment Data Validation) Audit
• OIG (Office of Inspector General) Audit
• IVA (Independent Validation Audit) Audit

Audit Ensures Accuracy with Advanced Risk Adjustment HCC Coding Technology

Health plans must use advanced HCC coding technology to ensure data accuracy and efficiency for CMS audits. Medicare organizations often face audits due to miscoded high-risk diagnoses, leading to overpayments. These audits assess ICD-10-CM and HCC code accuracy. A retrospective audit solution helps health plans and coders ensure precise chart review and compliance before claim submissions.

CMS Submissions Depend on Precise Coding & Auditing Solutions

A first-level review ensures medical coders are up-to-date with guidelines, guaranteeing accuracy in ICD-10-CM and HCC codes for accurate RAF scores. CMS uses Recovery Audit Contractors (RAC) to verify claims. Health plans should adopt advanced AI technology for HCC coding, which validates coders’ findings, compares claims, and generates precise RAF scores before CMS submission.

Coding Measures for Risk Adjustment Audit Fulfilling CMS Standards

To prepare effectively for a risk adjustment audit, consider the following checklist:

1. Adherence to Coding Standards & Frameworks: Review ICD and CPT standards adherence to coding frameworks like MEAT to ensure codes reflect documented diagnoses and procedures.
2. Assessment of Documentation Adequacy: Ensure medical records support coded diagnoses, procedures, clear physician notes, and test results.
3. Verification of Code Accuracy: Confirm codes are accurate and specific to avoid under-coding or up-coding.
4. Proper Use of Modifiers: Ensure correct modifier usage for bilateral procedures, multiple procedures, or differing complexity services.
5. Benchmarking and Performance Evaluation: Benchmark against industry standards or peers to identify coding performance improvements.
6. Ensuring Timely Submission: Compare service and submission dates to meet the insurer’s filing requirements, setting internal deadlines if necessary.
7. Systematic Audit Approach: Define audit objectives, assemble a knowledgeable team, and examine sample claims for coding errors.
8. Data Analysis for Strategic Insights: Analyze audit data to discern trends, transforming raw numbers into actionable insights for compliance.
9. Implementing Compliance Enhancements: Understand error causes and implement preventive measures, including staff training and updated documentation processes.

Steps to Prepare for a Risk Adjustment Audit

• Examine claims data to identify high-risk diagnosis codes recorded only once and lacking associated medication, procedures, or inpatient stays.
• Engage vendors for data normalization, linking healthcare activities to claims and payments.
• Conduct a mock regulatory audit based on data analysis to ensure team preparedness.
• Support a two-way coding process within your risk adjustment coding teams to identify and report additional diagnoses and correct erroneous codes.
• Return any identified overpayments to CMS within 60 days to comply with the Federal Register.
• Verify HRAs (health risk assessments) to ensure patients are treated for listed diagnoses.
• Enhance vendor and coder oversight by reviewing a larger sample of charts for accuracy.
• Implement AI-driven risk adjustment technology with clinical NLP to improve coding efficiency and accuracy.
• Assess current tools and workflows to ensure readiness for a regulatory audit, avoiding surprises.

Audit Levels: Funneling Risk Adjustment Audit

• Level I: Identify the audit intricacies specific to the submission period by selecting a clinical audit concern with significant implications for outcomes, costs, resources, or risk. Ensure strong clinical evidence supports the issue and that improvements can be evaluated and will have a meaningful impact.
• Level II: Agree on best practice standards by developing criteria and standards from sources such as CMS guidelines, clinical literature, expert consensus, EHR/EMR data, and patient outcome case studies.
• Level III: Define methodology based on the audit objectives and submission timeline.
• Level IV: Conduct pilot testing and data collection to review a few patients or records to test audit parameters. Revise and retest if necessary.
• Level V: Analyze and report the collected data, comparing results against established criteria and population health dynamics.
• Level VI: Make recommendations based on audit analysis, identifying areas for improvement.
• Level VII: Implement changes with an action plan to address the recommendations.
• Level VIII: Re-audit after a set period using the same methods as the original to ensure comparability and to demonstrate whether changes have been implemented and improvements achieved.

Utilizing Technology in Risk Adjustment Audits

Advanced health tech, utilizing clinical NLP, enhances health plans by reducing audit risks and improving compliance. Clinical NLP (cNLP) integrates with existing systems to analyze EHRs and claims data, optimizing care quality and reimbursement rates.

Pre-Visit Automated Analytics Workflow uses cNLP to review records, prioritize risks, and recommend proactive care, improving revenue management and patient preparation. At RAAPID, this approach assesses intervention appropriateness and outcomes, enhancing care and revenue cycle management while refining chase list prioritization and workflow efficiency.

Addressing Common Challenges in Risk Adjustment Audits

Every Challenge is an Opportunity

• Regulatory Compliance: Auditors ensure healthcare organizations meet federal, state, and local regulations, including HIPAA, ACA, and CMS rules.
  • Opportunity: Staying current avoids fines, identifies compliance issues early, and enhances patient health.
• Data Security and Privacy: Auditors ensure robust cybersecurity and compliance with data protection regulations to safeguard patient data.
  • Opportunity: Identifying vulnerabilities helps protect data and build stakeholder trust.
• Financial Auditing: Auditors verify financial reporting and identify inefficiencies in clinical records and reimbursement processes.
  • Opportunity: Revealing inefficiencies improves clinical documentation and resource allocation.
• Quality of Care and Patient Safety: Auditors assess clinical practices and safety protocols to ensure compliance with industry standards.
  • Opportunity: Enhancing care quality and safety improves the health plan’s star ratings and patient member enrollments.
• Operational Efficiency: Auditors evaluate staffing, resource allocation, and workflows to boost efficiency and reduce costs.
  • Opportunity: Identifying improvement areas helps streamline operations and save costs.

Post-Audit Actions as Part of Continuous Improvement

Post-audit follow-up ensures that changes have been successfully implemented and are effective. Clinical teams or the auditor can do this.

• Summarize Nonconformities Clearly: In closing meetings, summarize issues like incorrect codes to ensure team understanding. Recurring audits are crucial for maintaining ongoing compliance.
• Facilitate Questions and Feedback: Encourage healthcare providers to ask questions and provide feedback. Foster collaboration and prioritize improvements to ensure mutual understanding and agreement on corrective actions.
• Highlight the Need for Immediate Corrections: Addressing nonconformities promptly to prevent non-evidence-based conditions and ensuring immediate corrective actions regarding risk assessments is essential for fair reimbursements and ensuring compliant ROI.
• Investigate Root Causes: Conduct investigations to understand and prevent coding errors. Use suspect analytics to identify deviations and drive continuous improvement and better clinical training.
• Create a Corrective Action Plan (CAP): Develop a CAP after identifying root causes. Document implementation and effectiveness, updating coding guidelines and training records to address incorrect coding.
• Verify Effectiveness: Confirm the CAP’s effectiveness to ensure issues don’t recur. Use evidence and statistical reports to demonstrate that corrective actions addressed coding discrepancies and ensured compliance.

The Role of External Audits and Risk Adjustment Vendors

External audits, influenced by accreditation, certification, and peer reviews, emphasize quality assurance (QA) to ensure adherence to minimum quality standards. External auditors facilitate quality management practices that build confidence in meeting required standards. These audits evaluate a healthcare organization’s quality system against established criteria and are performed by expert auditors.

Choosing a vendor with expertise in advanced health tech and a deep understanding of risk adjustment methodologies is crucial for a comprehensive risk adjustment audit solution that supports the entire process. This includes:

• Accurate HCC Coding: Optimizes RAF scores and improves care quality.
• Chase List Prioritization: Identifies high-risk patients.
• Chart Retrieval: Supports HIE and EHR connectors.
• Prospective Solutions: Provides pre-visit, point-of-care, and post-visit review solutions.
• Retrospective Solutions: Offers retrospective review and audit tools.
• Data De-identification: Ensures PHI and PII de-identification for offshore coding.
• Proven Technology: Industry-leading Knowledge Graph infused cNLP-Neuro-Symbolic AI technology.
• Support: Includes training for payer and provider education on compliance regulations.

The once-challenging landscape of health risk adjustment has transformed significantly. Vendors leveraging Clinical NLP technology have revolutionized efficiency and accuracy. RAAPID strongly advocates replacing manual coding and abstraction of the past with automation and smart analytics, rendering detailed insights, significantly benefiting both vendors and healthcare organizations. The journey of transformation continues with Clinical NLP technology at the forefront, empowering risk adjustment stakeholders.

End Note

In summary, the evolving landscape of Medicare Advantage audits underscores the critical need for accurate clinical documentation to meet robust compliance measures. With CMS’s heightened scrutiny and the growing role of advanced AI technologies, healthcare organizations must prioritize proper pre and post-audit procedures supported by precision in coding and documentation.

Embracing AI-driven NLP solutions enhances data accuracy and mitigates financial penalties, ensuring adherence to regulatory standards. As audits become more rigorous, investing in innovative technologies and selecting the most suitable risk adjustment vendor for implementing sound auditing practices will be the key to navigating today’s complex healthcare environment effectively.