Health Affairs February 27, 2023
Risk adjustment is hugely important in Medicare Advantage (MA). Risk adjustment is intended to adjust for the underlying severity of enrollees’ health conditions and appropriately compensate private insurers caring for populations with varying expectations for expenditures. In each year, plans receive higher payments in direct proportion to documented risk: A 5 percent increase in documented risk leads to a 5 percent increase in payment. Yet, because insurers have considerable control over the documentation, it is common for insurers to erroneously document patient risk and receive inflated payments from the Centers for Medicare and Medicaid Services (CMS).
Risk Adjustment Data Validation (RADV) audits are CMS’s primary means of policing risk adjustment. RADV audits seek to ensure the integrity of the MA...
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