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2019 Program Audits Reflect Continued Improvement

By October 9, 2020Audits

Reprinted with AIS Health permission from the October 1, 2020, issue of RADAR on Medicare Advantage

CMS’s latest overview of program audits showed continued improvement among Medicare Advantage and Part D organizations, with the average overall audit score dropping from 1.03 in 2018 to 0.77 in 2019. Scores improved across all program audit areas except for two — Part D Formulary and Benefit Administration (FA) and Special Needs Plan Model of Care (SNP-MOC) — results that hint to sponsors where CMS is directing its energy, suggests one compliance expert.

According to the 2019 Part C and Part D Program Audit and Enforcement Report issued Sept. 14, the CMS Medicare Parts C and D Oversight and Enforcement Group (MOEG) imposed a total of $1.6 million in civil monetary penalties (CMPs) on eight sponsors in 2019. Two of those CMPs, however, were related to noncompliance identified outside of program audits. Fines based on program audits alone amounted to about $1.2 million, or an average of nearly $200,000 per organization, compared with an average CMP of about $41,000 for the 2018 program audits, which focused on smaller plans.

CMS in the report said it conducted 13 audits in 2019 but only reported on 12 because one of the sponsors audited last year was acquired by another audited sponsor. In 2019, CMS also imposed two intermediate sanctions: One was related to noncompliance with medical loss ratio requirements and one was for PACE audit deficiencies.

“Overall, I think we’re seeing a kinder, gentler CMS and I think we’re seeing less egregious audit findings over the last couple years,” remarks Babette Edgar, Pharm.D., area senior vice president with BluePeak Advisors, a division of Gallagher Benefit Services, Inc.

The average number of conditions cited per audit has steadily improved from 38 in 2012 to 11 in 2019, observed MOEG. And audit scores from 2017 to 2019 have generally trended downward in every program area except in FA and SNP-MOC, although the report noted that over a longer time period there has been a “generally positive trend in FA” while SNP-MOC scores have increased over that time period, reaching 2.00 for 2019. Of the eight sponsors whose SNP operations were audited, five received scores above 0.00, with California Physicians’ Service (Blue Shield of California) scoring the worst at 4.50.

The generally positive trend in FA may be due to improved processes on the part of PBMs as well as improved plan oversight of their PBM vendors, suggests Edgar. “Plans understand what they need to do from a testing standpoint and an oversight standpoint on January 1, and most of the PBMs that have Medicare business have really tightened their quality assurance processes,” she tells AIS Health.

The increase in average FA scores from 0.32 in 2018 to 0.58 in 2019 is likely because CMS audited larger plans in 2019 (which was the first of the current three-year audit cycle and encompassed about 71% of all MA and Part D enrollees), “and the big plans typically have more formularies and more customized formularies, so it’s not surprising that you see a little bit of increase in the audit scores,” observes Edgar. MOEG noted in the report that in both FA and Part D Coverage Determinations, Appeals, and Grievances (CDAG), sponsors with only one formulary performed better on audits in 2019 than sponsors that operated more than one formulary, and the difference in performance between the two groups was larger in FA.

Meanwhile, the average audit score in SNP-MOC (which CMS is proposing to change to SNP Care Coordination for the 2021 program audits) shot up from 1.28 in 2018 to 2.00 in 2019. Edgar explains that the SNP-MOC area is challenging based on the level of coordination and customization required. “Each SNP member has different care plans and it has to be customized to the member, so it’s very member-centric and thus it takes a lot of resources to manage SNP members,” she says.

“It’s heavy on requirements and therefore, I think that area in general is just difficult and CMS is digging in,” she adds. “They dug in more last year than they did in years previous in terms of finding things, and I think the SNP auditors are getting better and they know what to look for.”

Requirements include building a care plan for each member based on their risk assessment and continued communication with members, and updating that plan after every transition of care, according to Edgar, who is the former director of the Division of Finance and Operations for the Medicare Drug Benefit Group at CMS.

Common Conditions Were Excluded Again

The annual report did not include conditions commonly cited during program audits, which was an element of previous reports until the 2018 Program Audit and Enforcement Report excluded them, much to the consternation of some stakeholders. Noting that commenters on the 2018 report requested more granular information on common causes of noncompliance, CMS said it is “continuing to explore how best to analyze and present this information in a manner that is useful.” CMS said it does not want to provide a “misleading representation of sponsors’ overall performance” or suggest that “widespread or significant issues exist in the program when they do not.”

“The exclusion of the common conditions was interesting because when CMS did provide those, plans kind of knew where to focus,” says Edgar. “Even if they hadn’t found those things in their organizations on their own through their mock audits, they would then go back and look at the common findings and say, ‘OK, do we have an issue with this?’ and ‘Let’s look closer at these particular areas and figure out if we’re doing it well.’ So it kind of gave them a road map of where to go.” The report did, however, include “Sponsor Tip” text boxes throughout, which were helpful, Edgar points out.

Sponsors Are Doing Well With CPE

Compared with the 2018 program audits, sponsors showed the greatest improvements in the areas of Compliance Program Effectiveness (CPE) and Medicare-Medicaid Plan Service Authorizations Requests, Appeals and Grievances. Sponsors have continually improved in CPE, which is likely because it has been a component of program audits since 2010 and has seen few regulatory changes, MOEG observed. Moreover, “sponsors have dedicated significant resources to establishing compliance programs that meet CMS’ requirements,” added MOEG. Only three plans — Humana Inc., Tufts Health Plan, Inc. and California Physicians’ Service — in 2019 received scores for in this area, with a 0.33, 0.33 and 1.00, respectively.

During a Sept. 14 virtual presentation at the America’s Health Insurance Plans National Conference on Medicare, Medicaid & Dual Eligibles, Edgar suggested that CPE audits, which have historically been done on site, may be conducted virtually during the 2020 program audit cycle that is now underway. Edgar said BluePeak knows of at least six plans that have received audit engagement letters but suggested there could be more. And while CMS hasn’t gotten to CPE yet, the agency may evaluate whether it can perform CPE audits virtually because “for CMS, the travel is expensive and [time-consuming], so if they took that financially out of the equation, perhaps they would be able to do more audits and have less cost in the process. I think like everybody they’re going to evaluate what can be done virtually and what can’t be done virtually and weigh the risk-benefit of that.”

Other observations Edgar shared about the current program audits, which are happening in a compressed timeline due to the pandemic, include:

CMS is looking for specific things related to COVID-19 flexibilities, such as whether the plan relaxed quantity limits or other pharmacy edits for Part D enrollees.

In the area of FA, the agency is focusing on how coverage determination effectuation impacts claim adjudication. “In other words, they’re looking at if a coverage determination occurred, [and] then they’re asking to see the claims to see if a claim was effectuated for that prior authorization, so it’s a little bit different than what they’ve done in the past,” she said.

CMS is also focused on opioid edits in FA and reviewing the cumulative opioid calculations. “In terms of relaxing the edits, we have reason to believe that they’re considering looking at ICARs [Immediate Corrective Action Required] for these issues if the plans have not relaxed the edits as CMS had asked” in an April memo related to the coronavirus pandemic.

In the area of Part C Organization Determination, Appeals, and Grievances (ODAG), CMS is not only focusing on grievances to make sure they are categorized correctly along with organization determinations and appeals, but it has also been looking at data from the MAXIMUS Independent Review Entity — such as the number of auto-forwards and IRE overturns — and comparing it to the universes to make sure there is consistency between the two data sources.

Edgar added that she is not aware of any SNPs that have been chosen for audit, but advised that plans make sure they’ll be able to demonstrate timely health risk assessments and conduct mock audits to make sure “there’s a truly individualized and measurable ICP [Individual Care Plan].”

View the report at Contact Edgar at