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@Regulatory: June 2013

CMS Medicare Advantage Annual Notice and RADV Audit Notification


Two Health Plan Management System (HPMS) memos released by the Centers for Medicare & Medicaid Services (CMS) inform Medicare Advantage (MA) and Medicare Prescription Drug (Part D) Plans about upcoming financial challenges in the MA and Part D programs. The annual notice also addresses an expected reduction in payment to plans for 2014 as well as operational changes plans can expect to implement in twelve months to eighteen months. CMS also released a memo which addresses the RADV (Risk Adjustment Data Validation) audit process for the 2011 payment year (PY). Plans can expect CMS to begin selecting organizations for audit in June 2013. These audits may pose a financial risk for plans, since CMS will be applying its extrapolation methodology as it was defined in February 2012. The application of the extrapolation methodology could affect the financial performance of plans in the next year as CMS attempts to recoup overpayments from 2011. In this issue of @Regulatory, summaries of the memos are provided and potential financial impacts are discussed.

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