OIG Focuses on Prevention in New Medicare Advantage Risk Adjustment Report

The Office of the Inspector General (OIG) continues to focus on Medicare Advantage (MA) risk adjustment payments, issuing a report this week detailing its audit of MA risk adjustment payments based on acute stroke diagnosis codes that do not have corroborating hospital records. OIG found that submissions for all 97 sampled enrollees were not supported in the enrollee’s medical records, estimating $462 million in potential net overpayments in 2021. Unlike prior OIG audits assessing various high-risk diagnoses submitted by a single MA plan, this report focuses on a single condition across multiple plans. While the audit is not without its limitations, it is another signal that MA organizations should consider implementing proactive measures to ensure the accuracy of acute stroke diagnosis codes (in addition to other high-risk diagnosis codes) prior to submission to Centers for Medicare & Medicaid Services (CMS) and expect to continue seeing code-level audits from OIG.

OIG Pushes Prepayment Action

Because the audit involves enrollees across multiple MA plans, OIG does not recommend that CMS pursue recovery of the potential overpayments. Rather, OIG urges CMS to implement prepayment controls that will prevent overpayments for inaccurate acute stroke diagnosis codes. OIG concluded that CMS’s existing procedures for reviewing diagnosis codes failed to prevent inaccurate acute stroke diagnosis codes from being used in the risk adjustment program. OIG calls out CMS’s submission instructions and filtering procedures as both failing to address inaccurate acute stroke diagnosis codes in physician records, and further notes that risk adjustment data validation (RADV) audits are not intended to identify all improper code submissions. 

CMS neither formally accepts nor rejects OIG’s recommendations, promising only to “take OIG’s report into consideration.” CMS’s response to the report emphasizes MA organizations’ responsibility for ensuring their submissions’ accuracy and otherwise stands by CMS’s recent efforts to ensure accurate payments. OIG counters that MA organizations’ compliance programs vary and likewise failed to prevent the errors here. OIG underscores that its recommendations can complement CMS’s ongoing efforts to achieve “substantial cost savings.”

Take These Findings with a Grain of Salt 

OIG’s report is inherently skewed, focused only on a condition that has been identified as high-risk for miscoding. Because of this inherently biased audit protocol, it is not surprising that 97% of the enrollee samples were found to be unsupported. 

Generally, extrapolation of overpayments estimated from a highly targeted subset of enrollees is statistically questionable. OIG’s headline number of $462 million certainly grabs attention, but it is “potential” and doesn’t represent a formal overpayment determination or recoverable amount. Indeed, OIG expressly declines to recommend recovering this amount.

MA Organizations Should Consider Preventive Action

Despite the audit’s limitations, OIG’s emphasis on implementing prepayment controls indicates a shift towards preventing, rather than merely recouping, improper payments. While CMS’s acceptance of OIG’s recommendations seems lukewarm at best, MA organizations should consider implementing preventive measures to ensure diagnosis code accuracy prior to making a submission (in addition to corrective measures). In particular, acute stroke diagnosis codes should be supported by hospital records for the same year of service,  and not only by physician records, or prior years’ records.

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