In the Medicare Advantage (MA) context, "risk adjustment" is the process by which the Centers for Medicare & Medicaid Services (CMS) reimburses Medicare Advantage Organizations (MAOs) based on demographic factors and the health status of enrolled members. By regulation, MAOs must submit risk adjustment data that characterize the content and purpose of items and services provided to MA enrollees and also conform to CMS requirements for submitting this data. In practice, such submissions include encounter data and risk adjustment eligible diagnosis codes that map to hierarchical condition categories (HCCs). CMS requires MAOs to certify to the accuracy, completeness and truthfulness of their risk adjustment data submissions.

CMS performs risk adjustment data validation (RADV) audits to validate that the diagnoses codes submitted for risk adjustment are documented in the medical record and correctly reported to CMS for the particular MA enrollee. Historically, MAOs have been frustrated by the lack of clear guidance from CMS on the requirements for risk adjustment data submissions.

CMS recently issued a Medical Record Reviewer Guide which it intends to use for RADV audits commencing after September 27, 2017. This is a significant development because by knowing CMS' expectations with regard to medical record coding for risk adjustment purposes, MAOs will be able to implement more effective compliance and vendor oversight activities. Given the number of risk adjustment related federal civil False Claims Act (FCA) cases that are pending, review of the Medical Record Reviewer Guidance by MAOs is strongly recommended.