On January 30, 2023, the Centers for Medicare & Medicaid Services (“CMS”) issued the final rule on risk adjustment data validation (“RADV”) audits of Medicare Advantage (“MA”) organizations. The new ruling provides significant changes, including permitting CMS to scrutinize a sample of an MA organization’s (“MAO”) diagnoses presented for risk adjustment purposes (from 2018 onwards), and subsequently apply the audit findings to compute an extrapolated improper payment amount for the MAO’s contract.
JD Supra reports that this ruling has recently been subjected to legal challenge.
There are several contentious points in the suit filed against the CMS. Primarily, the plaintiffs argue that applying the use of extrapolation in RADV audits is contradictory to the provisions of the Medicare Act, arguing that the Act’s language does not provide CMS with the express statutory authority to use extrapolation. They also allege that the method employed discloses errors that are neither systematic nor widespread within an MAO’s risk adjustment data.
Additionally, the plaintiffs also dispute the CMS’s rationale for implementing extrapolation, particularly its reliance on RADV audits to recover all overpayments made to MAOs. They argue that this does not align with the Medicare Act’s intent, which is primarily designed to protect beneficiaries and provide high-quality healthcare.
The outcome of this legal challenge could have far-reaching implications for MAOs and their risk-adjustment processes. Moreover, if the plaintiffs successfully establish that CMS’s practices exceed its statutory authority under the Medicare Act, it will likely prompt a reevaluation of CMS’s RADV audit practices, with potential impact not only on MAOs, but also on beneficiaries.
Legal professionals, especially those serving healthcare sector clients, must keep a close watch on the progress of the lawsuit. The result could offer important insights into how CMS’s authority and practices may be interpreted and applied in the future.