By Shelley Davis

Health plans today are facing unprecedented regulatory scrutiny, with the threat of risk-adjustment audits increasing.

With Risk Adjustment Data Validation (RADV) audits by the U.S. Centers for Medicare and Medicaid Services (CMS) projected to increase, health insurers are expanding their focus beyond accurate data capture to include audit readiness.
For example, CMS announced last year plans to increase audits of Medicare Advantage (MA) contracts and to add resources to accelerate those audits. The agency will increase audits from approximately 60 MA plans per year to approximately 550, and expand record review from 35 records per plan to between 35 and 200, depending on plan size.

Further, CMS plans to grow its medical coder team from 40 to around 2,000. CMS cited estimates that MA plans overbill the federal government by up to $43 billion annually.

At the same time, the prevalence of chronic conditions among older adults has grown over the last two decades, and the trend is expected to continue, according to research from the U.S. Centers for Disease Control and Prevention (CDC). For example, in 2023, 76.4% of U.S. adults had at least one chronic condition, and 51.4% reported multiple chronic conditions. For those aged more than 65 years, the numbers jump to 93% and 78.8%

A key element in health plans’ efforts to improve risk adjustment is shifting from retrospective to prospective analysis of beneficiary risk, which allows health plans and their provider partners to gain a comprehensive, 360-degree view of member health.

Revenue protection is certainly a reason why insurers focus more on improving risk-adjustment strategies, but it’s not the only one. Better risk-adjustment strategies help payers and providers close more gaps, improve outcomes, allocate care-management resources where they’re most needed, and prevent worsening of chronic conditions.

What’s driving the disconnect between RAF scores and population health?
Many health plans believe their risk adjustment programs are working well because their supporting processes are mature. However, the infrastructure supporting these programs has struggled to keep pace with the growing complexity of healthcare data and clinical documentation.

A major reason for the disconnect is where key clinical insights are recorded. Much of the most important information about a member’s conditions is found in narrative clinical notes rather than in structured fields. Providers often document diagnoses, symptoms, and care considerations in detailed narratives that traditional systems cannot easily surface or translate into coded risk.

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