Compliant Coding and Documentation: Minimize Compliance Risk with CMS through HCC audit programs

Was your plan selected for this year’s Medicare Part C Contract-Level Risk Adjustment Data Validation (RADV) audit of 2014 dates of service?  Have you participated in a Department of Health & Human Services (HHS) Office of Inspector General (OIG) audit related to risk adjustment submissions? Does your plan participate in the Affordable Care Act (ACA) individual and small group marketplace?  Are you a provider who was asked to supply records for any audit related to risk adjustment and/or are you in a risk bearing agreement with one or more payers for Medicare Advantage (MA), ACA, or Medicaid?

If you answered “yes” to any one of these questions, you know what a critical role documentation and coding plays in a risk adjustment program.  Even plans and providers who answered “no” to any of the questions should have a program in place to mitigate compliance risk when it comes to the accuracy and integrity of data being sent to CMS.  CMS requires health plans to submit accurate and complete risk adjustment data that are fully supported in the medical record with adequate evidence that a condition exists and is being managed.  A comprehensive, year round Hierarchical Condition Category (HCC) audit program should be an important part of any risk adjustment program in order to mitigate risk with CMS in the future. 

A well-rounded HCC compliance program should include the following components:

  1. Coding policy due diligence – Review of internal coding guidelines and policies and procedures of coding practices (for plans with internal coding teams).  Review of vendor coding policies and performance service-level agreements (SLAs) included in coding contracts.
  • Mock RADV – Replicate the entire RADV process from analytics required to identify the source of the HCC for validation to creating the provider chase file and requesting the medical records for validation of the HCC.  A RADV requires the coordination of multiple business units to meet the strict and constricted timelines of CMS.   RADV preparedness will ensure all business units know their role in the RADV and can execute effectively if your plan is selected.
  • Targeted Diagnoses Audit – Identify potential “high risk” diagnoses codes submitted on claims and validate these against the medical record to ensure that sufficient documentation exists to support these diagnoses.  Examples include ”single occurrence” diagnoses where there is only one instance of the diagnoses submitted for a member in a calendar year by only one provider.
  • Provider Outlier Audit – Identify providers who have a significantly higher prevalence of members with specific chronic conditions than your plan’s average, based on their claim submissions.  Also, look at the pattern of diagnoses being submitted by provider specialty types and identify outliers or mismatches.  For example, some chronic conditions are more suited to be assessed and managed by certain specialists versus other specialty types.  Payers can mine this data and pull medical charts for these provider outliers to review the medical record against the claim submission.
  • Vendor over-reads:  Most payers or providers outsource some or all of their retrospective chart reviews or prospective assessment programs to external coding vendors.  These vendors then submit the supplemental diagnoses for submission by the health plan.  Typically, coding vendors have performance SLAs to ensure 95% or greater accuracy based on the vendor over-read of a sample of their charts. Payers should also perform an independent review of their coding vendors to ensure the accuracy of the diagnoses being submitted.
  • Detailed and technically sound delete process infrastructure:  In any instance where a diagnoses is found to have insufficient evidence in the medical record, payers are obligated to delete the diagnose codes from a CMS submission.  It is important for payers to have a thorough understanding of their delete process to ensure they are not over-deleting diagnoses codes that could lead to potential negative financial consequences.  Prior to any delete project resulting from an internal audit, plans need to examine the potential financial implications that might affect their budgeting and accrual process.
  • Provider feedback and Clinical Documentation Improvement:  If any diagnoses are found to be unsupported in the medical record, it is imperative that providers are educated on the importance of proper documentation and coding, to avoid the re-occurrence of the submission of any unsupported diagnoses.  Plans should have a robust provider feedback loop so that providers are continually kept abreast of how they are documenting and coding, and if needed deploy a clinical documentation improvement plan.

Risk adjustment plays a critical role in revenue generation for payers who participate in government sponsored programs such as MA.  Putting in place a risk adjustment clinical documentation compliance program will enable payers to avoid financial risk in the case of a potential MA RADV extrapolation and/or an ACA marketplace adjustment following an Internal Validation Audit (IVA).

CMS HCC RADV audits are here to stay and plans that participate in the ACA marketplace are already familiar with the IVA requirements.  Many plans have also been targeted for an OIG audit.  CMS is looking to use these audits to recoup improper payments to plans which may have a significant financial impact.  Plan and provider executives at all levels – including the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Compliance Officers – should evaluate what programs they have in place to mitigate future audit risks.

Whether you already have a risk adjustment compliance program in place and need an independent review of these programs against best practices or are thinking about designing and implementing a program, we can help.  For additional questions and inquiries about how GHG can help, please contact me at

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