Last week, the Centers for Medicare & Medicaid Services (CMS) announced the 2016 Health and Human Services Operated Risk Adjustment Data Validation (HHS-RADV) would be conducted as a pilot year in the same aspect as the 2015 HHS-RADV. This announcement came two days after the final risk adjustment data submissions were due to be submitted to the EDGE server for 2016 dates of service.
The Affordable Care Act (ACA) market has been quite a struggle for health plans since it started. Change is never easy for most organizations who have been running a business in the same fashion year after year. Risk adjustment really threw health plans a curve ball when it came to the functional operations and internal validations required to be in place to effectively run this program. The effort around establishing a best-in-class risk adjustment program was underestimated right from the start. This, along with many other variables, is what is causing the staggering financials seen across the industry.
The announcement that came from CMS on May 3, 2017, was not an overwhelming surprise and was graciously welcomed by health plans. Since the deadline to submit to the EDGE server was completed prior to the announcement, the health plans submitted their information under the assumption the HHS-RADV would function in its entirety, which included having the financial penalties applied, if necessary. So working under that assumption, health plans marched forward utilizing lessons learned from prior years in managing the data they were sending for risk adjustment to ensure it was complete and accurate.
These pilot years allow CMS and health plans to create a refined auditing process, understand benchmarks, and ensure the validation process is working as it was intended. After CMS was able to review results from the HHS-RADV and comments from issuers regarding the process and validation results, the decision was made to move forward with another HHS-RADV pilot year. The dynamic of the timeline that occurred when the announcement was released in comparison to the EDGE server data submission deadline allows the results of the 2016 pilot year to serve as a solid foundation to compare against the 2015 HHS-RADV pilot that was conducted.
Even though a payment year may be closed and a pilot HHS-RADV had transpired, that does not mean CMS cannot come back to conduct further auditing. This is a practice seen throughout Medicare Advantage plans quite often, and I would anticipate the same type of practice would stand true for the ACA plans in the coming years.
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