Proactive Precision: Sharpen the Tools in Your RADV Preparation Toolbox

The Centers for Medicare & Medicaid Services (CMS) recently signaled a dramatic escalation of its efforts to combat fraud, waste, and abuse in Medicare Advantage (MA), and has committed to the sharpening of its tools to accomplish this goal. With the recent announcement that CMS will begin auditing all eligible MA contracts each payment year and aggressively expedite the completion of audits for 2018-2024, the message is clear: risk adjustment compliance through precise medical coding is no longer just best practice – it will be absolutely essential for survival in the MA landscape.

For years, MA plans have received risk-adjusted payments, meaning they receive higher reimbursements for enrollees with more serious or chronic conditions. The integrity of this system depends heavily on the accuracy of the diagnoses submitted by MA plans. However, as Dr. Mehmet Oz, CMS Administrator, emphatically stated, it's time for CMS to "faithfully execute its duty to audit these plans and ensure they are billing the government accurately." This heightened scrutiny directly addresses long-standing concerns about overbilling, with federal estimates suggesting MA plans may overbill the government by an astounding $17 billion annually, a figure the Medicare Payment Advisory Commission (MedPAC) believes could be as high as $43 billion per year. Past audits for payment years 2011-2013 alone revealed overpayments ranging from 5% to 8%.

The Stakes Have Never Been Higher

This expanded audit initiative dramatically elevates the importance of precise medical coding and robust compliance programs for MA plans. Here's why:

• Financial Catastrophe Averted (or Incurred): Inaccurate coding, particularly upcoding (billing for more severe conditions than warranted), directly leads to overpayments. With CMS now auditing all eligible MA plans annually and significantly increasing the number of records reviewed per plan (from 35 to up to 200), the likelihood of detecting such discrepancies has skyrocketed. The consequence? Substantial recoupments of overpayments, which can severely impact a plan's financial stability and profitability. The ability for CMS to "appropriately extrapolated" audit findings further amplifies this risk, as a small sample of errors could lead to massive repayment demands.
• Intensified Regulatory Pressure: The Trump Administration's plan to clear the backlog of audits from 2018-2024 by early 2026 demonstrates an unprecedented commitment to enforcement. This includes deploying "enhanced technology" - sharpened tools - to flag unsupported diagnoses and, critically, expanding CMS's team of medical coders from a mere 40 to approximately 2,000 by September 1, 2025. This massive influx of human capital, dedicated to manually verifying flagged diagnoses, underscores CMS's determination to leave no stone unturned.
• Reputational Damage and Loss of Trust: Beyond financial penalties, consistent findings of non-compliance and inaccurate billing can severely damage an MA plan's reputation. In a competitive market, a tarnished image can lead to reduced enrollment and a loss of trust among beneficiaries, providers, and stakeholders.
• Operational Strain and Resource Drain: Responding to extensive audits requires significant internal resources – staff time, documentation retrieval, and legal counsel. Plans with a history of coding inaccuracies will find themselves constantly battling audit findings, diverting critical resources away from patient care and business development.

The Path Forward: Proactive Precision

Given this aggressive new auditing landscape, MA plans must make proactive and sustained investments in:

• Comprehensive, Accurate Documentation: Accurate medical coding begins with comprehensive, legible, and clinically supported documentation by providers. This is the time to invest more heavily in robust clinical documentation improvement programs that are embedded into pre-clinical and post-clinical workflows.
• Expert Medical Coders: The sheer volume of codes, modifiers, and specific guidelines demands highly skilled and continuously trained medical coders and supporting risk adjustment staff who are adept at accurately translating clinical information into billable codes and leveraging AI-enabled tools. The expansion of CMS's own coding workforce should serve as a wake-up call for plans to match this expertise internally. Medical coders will need to be equipped with auditing skills, which is also important in quality assurance support for AI-enabled coding tools.
• Robust Internal Audit and Compliance Programs: Regular internal audits, distinct from external ones, are crucial for identifying and rectifying coding errors before CMS comes knocking. Strong compliance programs, with clear policies, procedures, and training, are essential to foster a culture of accuracy and adherence to regulations.
• Advanced Technology: Leveraging AI-powered tools and advanced analytics can help plans identify potential coding discrepancies, improve documentation quality, and proactively address areas of risk. CMS itself says it is deploying "advanced systems" – MA plans must do the same to keep pace.

The message from CMS is crystal clear: the days of significant overpayments in MA, whether intentional or not, are drawing to a close. For MA plans, compliance and accurate coding are no longer optional extras; they are fundamental requirements for continued participation in a program under intense and unprecedented scrutiny. Those who embrace this reality with robust internal controls and a commitment to precision will be best positioned to thrive in this new era of accountability.

Dawn Carter
Sr. Director, Health Policy and Regulatory Affairs
Centauri Health Solutions, Inc.