Name Process Penalties Appeals process
CMS selects 30 contracts from MA
organizations for RADV audits based on
diagnosis coding intensity for enrollees
whose reported diagnoses increased
in severity at the fastest rates.
CMS ranks MA contracts by categorizing
diagnoses into groups of clinically related
conditions called hierarchical condition
categories (HCCs), and uses the HCC and
demographic information to calculate a
risk score for each enrollee. Each contract
is then divided into three risk score
categories: high-, medium-, and low-risk.
CMS then randomly selects contracts for
audit: 20 high-risk, five medium-risk,
and five from the low-risk scores.
After CMS selects 30 MA contracts to audit,
up to 201 enrollees are chosen from each
contract based on the enrollees’ risk
scores. 67 enrollee records are audited
from each of the three risk score groups.
CMS uses the RADV results to
calculate overpayment estimates
and adjusts the monthly payments
made to MA organizations for
the next payment period.
MA organizations may file a Medical
Records Dispute (MRD) for claims
that result in payment recovery
through the RADV administrative
appeals process within 30 days of
the preliminary audit findings.
Under the ACA HHS-RADV, Initial Validation
Audit (IVA) and Second Validation Audit
(SVA) entities test a sample of health plans’
enrollees to determine if an error rate
should be applied to the plan’s average
risk score. The process includes six stages:
1. Sample selection
4. Error estimation
6. Payment adjustments
If the IVA and SVA identify insurer-
level overpayments, CMS uses
the error rate discovered by the
RADV to determine a payment
adjustment to recover the funds.
CMS provides health plans the
option of appealing the audit results
or the application of the payment
adjustment through the RADV
administrative appeals process.
TABLE 2. PROCESS, PENALTIES, AND APPEALS PROCESS, CONTINUED
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