Insurers Slam CMS for Medicare Advantage RADV Final Rule

The final rule calls for stricter audits on Medicare Advantage plans. AHIP president and CEO Matt Eyles referred to the rule as “unlawful and fatally flawed.”

Insurers are pushing back after the Centers for Medicare & Medicaid Services (CMS) on Monday issued its final rule on the Medicare Advantage Risk Adjustment Data Validation (RADV) program. The rule will lead to stricter audits on Medicare Advantage plans.

Currently, CMS regulators have been reviewing a small group of beneficiaries’ medical records and comparing them to the patients’ diagnoses to verify that MA plans were billed correctly. Medical records don’t always support patient diagnoses reported by MA organizations, leading to “billions of dollars in overpayments and increased costs to the Medicare program,” CMS said. This audit created an error rate that will be extrapolated to all records from MA plans dating back to 2018 under the new rule (which differs from a previous draft that would have applied the extrapolation as far back as 2011). In addition, the rule excludes an adjustment factor, also known as a fee-for-service adjuster, which would have eased penalty amounts.

CMS anticipates receiving as much as $4.7 billion over a decade due to this final rule, The New York Times reported.

“For years, federal watchdogs and outside experts have identified the Medicare Advantage program as one of the top management and performance challenges facing HHS, and today we are taking long overdue steps to conduct audits and recoup funds,” said Xavier Becerra, HHS Secretary, in a news release. “These steps will make Medicare and the Medicare Advantage program stronger.”

Meanwhile, America’s Health Insurance Plans (AHIP), an advocacy organization for insurers, said the final rule will negatively affect seniors.

“Our view remains unchanged: This rule is unlawful and fatally flawed, and it should have been withdrawn instead of finalized,” said Matt Eyles, president and CEO of AHIP, in a statement. “The rule will hurt seniors, reduce health equity, and discriminate against those who need care the most. Further, the rule would raise prices for seniors and taxpayers, reduce benefits for those who choose MA, and yield fewer plan options in the future.”

The Blue Cross Blue Shield Association echoed Eyle’s comments, though noted the need for improvements.

“While we all can agree that improvements can be made, the failure to adjust for the legitimate differences between Medicare Advantage and original Medicare will have a detrimental effect on the seniors and people with disabilities who rely on the Medicare Advantage program,” said David Merritt, BCBSA senior vice president of policy and advocacy, in a statement. “CMS should have implemented a narrower solution aimed at a few bad actors, but instead this overreaching regulation will raise costs, reduce choice and make it more difficult for seniors and those with disabilities to effectively manage their health.”

Another concern of the final rule is that it could potentially lead to higher premiums for beneficiaries of Medicare Advantage plans, according to the Better Medicare Alliance, a Medicare Advantage advocacy organization.

“While our review of the rule is ongoing, we are focused on the potential unintended consequence of creating an environment of higher premiums and fewer benefits for the more than 29 million seniors and people with disabilities who choose Medicare Advantage,” said Mary Beth Donahue, president and CEO of the Better Medicare Alliance. “We encourage CMS to work with stakeholders to put in place solutions that are transparent and fair to preserve stability for beneficiaries.”

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