The Affordable Care Act requires insurers to hire independent auditors to validate member demographic & enrollment data, medical claims data and medical record documentation in accordance with Department of Health and Human Services (HHS) operated Risk Adjustment Data Validation (HHS-RADV) Initial Validation Audit (IVA) procedures.
Developed by the Centers for Medicare & Medicaid Services (CMS), the procedures have significant technical and project resource implications for both the health plan (issuer) and the initial validation audit (IVA) vendor (auditor). CMS has implemented HHS-RADV audits as a means to keep insurers honest by fighting risk score inflation, FierceHealthPayer reported in a risk adjustment article.
Audits for the initial benefit year of 2015 are primarily meant to assess the accuracy of data that are submitted to the External Data Gathering Environment (EDGE) server and used for risk adjustment calculations. No financial penalties will be imposed by CMS during this pilot year for any adverse findings from the audit, nor will issuers by adjusting payments within their respective markets. CMS will hire second validation audit (SVA) entities to review the IVA auditor’s findings for data from the pilot year.
CMS will begin to use audit results to adjust risk adjustment payments to insurers with 2016-benefit-year data. Both issuers of Marketplace and issuers of non-Marketplace individual and small group plans are subject to the HHS-RADV IVA requirements.
IVA auditors follow six steps to perform the member demographic & enrollment, medical claims and diagnostic validation, according to a CMS presentation on the RADV-IVA process. Here’s how to prep for your IVA vendor to maximize RADV audit performance based on those steps.
1) Issuer identifies source data and performs mapping of data
Document your process for mapping Source System data to EDGE data submissions. Specify the screens on which your IVA vendor can find information it needs to validate EDGE data elements such as Unique Enrollee ID, cost-sharing reductions and billing type codes. Provide step-by-step navigation for accessing these screens as well. You must also clarify how your IVA auditor can determine if claims are capitated and explain how supplemental diagnoses are identified. All of this documentation will help your IVA vendor validate data.
2) Review and confirm mapping of data
Your IVA vendor will review with you the documentation that you provided in the first step to confirm their understanding of your enrollment, premium and claims source systems. They will then create work papers that will include your documentation as well as their procedures for validating data with supporting screenshots. Upon your approval, they will start using these work papers to validate demographics, enrollment and claims data. So, the better you document and explain your mapping process from the audit’s outset, and the more detailed you are in assessing their work papers, the sooner they can begin validating data and the more efficiently they can complete the project.
3) Perform enrollment and demographics validation
Your IVA vendor will check if demographics and enrollment data matches on the EDGE server and your source systems. Every record will be checked. Avoid discrepancies by confirming that masked unique enrollee IDs from the EDGE server link to actual enrollee identifiers. Your IVA will be checking matches of 14 fields between the source system image and the EDGE server report.
4) Perform medical claims data validation
CMS requires IVA auditors to follow a separate five-step process for medical claims data validation.
- The auditor compiles the population of claims to be sampled from the RADV Medical Claim Extract Report.
- They then randomly choose 15 to 130 claims for sampling. They will start with 15 claims but gradually increase the sample size up to 130 claims as more are deemed to have errors. You will fail claims validation if 15 claims have errors.
- Each claim is assessed for validation of 11 claims data elements, including final adjudication status and service code(s). Your auditor will check against source documentation. Prepare to provide additional documentation for capitated encounter data, like how EDGE data was populated and how the encounter was allowable within RA criteria.
- The reviewer identifies and documents all errors between your source systems and the RADV Medical Claims Extract Report. They will deem any claim that has at least one discrepancy in claims data elements as containing errors.
- Validation will end or your sample size will increase based on the number of claims with errors in the current sample. For example, if none of the 15 claims initially sampled have an error then your auditor will cease validation. If at least one of those first claims has an error, then the sample size will increase to 25 claims. You can then have no more than one claim with an error. Again, the sample size could gradually increase up 130 claims, in which only 14 claims can have errors, otherwise, you will fail claims validation.
5) Conduct medical record documentation review to substantiate each member HCC
The issuer must provide the IVA vendor with source medical record documentation to validate submitted medical claims and supplemental diagnoses for Risk Adjustment data for each sampled enrollee. Issuers are responsible for making all necessary documents accessible to the IVA vendor. The review of enrollee health status must be conducted by certified medical coders accredited by a nationally recognized accrediting agency such as:
- American Health Information Management Association (AHIMA), or
- American Academy of Professional Coders (AAPC).
If a discrepancy between issuer submitted diagnoses and the medical record is uncovered during the data validation audit process and the result would cause a change to the enrollee’s risk score, then a risk adjustment error would be reported by the IVA vendor to CMS. A risk adjustment error could be the result of incorrect demographics data, or due to an unsupported HCC diagnosis, or a new HCC diagnosis identified during the medical record review. If a risk adjustment error is identified, the error must be validated by having a senior reviewer from the IVA vendor confirm each error. A “senior reviewer” is a reviewer certified as a medical coder by a nationally recognized accrediting agency who possesses at least five (5) years of experience in medical coding.
6) Record validation results
Your auditor will document in the IVA Audit Tool the results of its comparisons of data from the EDGE server and your source systems, including demographics, enrollment and claims data. The matrix will then be included in your final submission package along with supporting documentation and work papers.
Given that CMS will use audit results to adjust risk adjustment payments, beginning with 2016-benefit-year data, prep for your IVA vendor based on the process that they will follow, so that you can maximize RADV Audit performance.