/ Business / Contenders vs. Pretenders II: A Post-Pilot Year IVA Update

Contenders vs. Pretenders II: A Post-Pilot Year IVA Update

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healthcare on April 3, 2017 - 9:00 am in Business

The pilot year for the Initial Validation Audit  (IVA) has concluded and the real show is about to begin. While 2015 benefits data carried no direct consequences to QHPs’ risk adjustment payments and charges, 2016 benefit year data will be utilized to calculate error rates and adjust future year QHP payments. Like last year, the first and most crucial QHP requirement will be for Qualified Health Plans (QHPs) and QHPs on (and off) the exchange to vet potential IVA vendors prior to the April 14th – April 28th 2017 designation period to select an IVA entity with the qualifications, culture, and capacity to conduct their organization’s multistage audit.

The Background

The IVA is a required stage of the U.S. Department of Health and Human Services’ (HHS) Risk Adjustment Data Validation (RADV) process and is outlined in section 45 Code of Federal Regulations (CFR) §153.350 and 153.630. The IVA has two main components: the Demographics and Enrollment Data Validation and the Health Status Data Validation. Both of these validations carry their own stringent requirements, procedures, and responsibilities delineated for both QHP and IVA auditor. Likewise, the audit as a whole has overarching procedures and reporting requirements that must be satisfied. While HHS requires that QHPs and their selected IVA vendors work concurrently to conduct the IVA, the results of the audit will be evaluated during a Second Validation Audit (SVA) conducted by the Centers for Medicare and Medicaid Services (CMS).

As during the pilot year, any IVA vendor selected by a QHP must be an independent organization that is free of conflicts of interest and not engaged in any parallel risk adjustment activities for the QHP that might jeopardize the integrity of the audit. Beyond these basic requirements, there are distinguishing characteristics of IVA vendors that, as the article title suggests, rightly separates the “contenders” from the “pretenders”.

What to Look for in a Vendor

Selecting a capable IVA vendor is of the utmost importance this year as the outcome of the audit can carry serious repercussions for years to come. While it is expected that some IVA vendors will likely exit the IVA market entirely, the vendors that remain should be well-acquainted with the intricacies of the IVA process and meet the following fundamental requirements:

  1. Pilot Year Experience: It can be rightfully said that the IVA pilot year served as a “trial by fire” for both QHPs and IVA vendors, so perhaps the most immediate qualification for IVA vendors is that they have quantifiable experience conducting audits for plans during the 2016 pilot year and, as a result, the infrastructure in place to conduct IVAs for QHPs in 2017. Even more valuable to QHPs will be to engage with an IVA vendor that has experience working with numerous QHPs and a variety of source systems. Some questions to ask potential vendors include: Did you conduct IVAs during the pilot year? How many QHPs did your organization serve during the pilot year? How many Health Insurance Oversight Systems (HIOS) did your organization conduct audits for?
  1. Qualified and Experienced Staff: As with most businesses, an IVA entity is only as extraordinary as the team working behind the scenes. The depth of experience, cross-functional finesse, and demonstrated ability when confronted with regulatory changes are just a few of the qualifiers required to successfully navigate through the demanding labyrinth of IVA requirements and CMS changes. A few questions to ask your prospective vendor include: Could you describe your relationship with CMS? What was your experience handling and communicating regulatory changes? How many years of experience, on average, do your coders possess?
  1. Strength of Account Management: The foremost need that we’ve heard expressed from QHPs considering partnering with our organization is a robust approach Account Management. From providing clearly described requirements, promptly disseminating CMS communications, and transparent progress reporting – a vendor’s approach to Account Management can make or break a business relationship and is especially essential to successfully completing an IVA. Feedback to retrieve and consider: How frequently did you communicate with the plans that you contracted with throughout the IVA? What were some standard agenda items that drove discussion? How were customer feedback loops utilized? What was your process for handling and closing account issues?
  1. Demonstrable Adaptability: Touched upon in Step 2, the pilot year taught us how remiss it would be to understate the importance of prospective IVA entities possessing a high degree of adaptability in the face of swiftly changing regulations – especially considering our politically charged environment. Vendors should be more than capable of detailing: their level of involvement in CMS’ decision-making process, steps that were taken to acclimate to specific shifts in IVA protocols during the pilot year, and their process to ensure that the QHPs they audited were both informed and guided through the changing regulatory landscape.
  1. Transparency in Results: The IVA is, by CMS design, a collaborative process between QHP and IVA entity. This means that QHPs should not be surprised when you get the IVA audit matrix IVA vendors have a duty to be upfront and forthright with QHPs every step of the way to avoid inaccuracies resulting from oversights, errors, and simple misunderstandings. Some questions to pose to prospective vendors include: How did you relay your findings to the QHPs you contracted with? How did you handle validation discrepancies? What was included in your reporting package?
  1. Needs Based Pricing: No matter how great a prospective vendor appears to be, the cost of conducting an IVA remains, as most CFOs would attest to, a heavily-weighted factor during the vendor selection process. CMS estimates that the average IVA will run plans approximately $150,000 in total costs[1], which includes both internal and external investments. While determining in-house resource allocation will undoubtedly put even the most well-oiled accountants to work, deciphering a vendor’s fee should be the easiest part of the equation. Since the scope of work required to successfully conduct an IVA will vary wildly from one QHP to the next, vendors should be prepared to provide pricing that clearly details what is included in the base fee to conduct the IVA and any add-on services that may or may not be needed.
  1. Advocacy and Creditability with CMS: Despite the challenges faced by QHPs and IVA entities alike during the pilot year IVA, CMS frequently disseminated invaluable information through the Registration for Technical Assistance Portal (REGTAP) and provided plenty of opportunities for IVA entities to be engaged in the IVA development process. QHPs gauging prospective vendors should be aware of these opportunities and have every right to ask: What was your level of participation in the development of the IVA? How did you keep QHPs updated with regards to information released during REGTAP? How did you take advantage of opportunities to advocate on behalf of QHPs?

These are just a few of the many qualifiers that should factor into a QHP’s vendor selection process to ensure that a trusted vendor is chosen to conduct their IVAs.

What to Avoid When Selecting an IVA Vendor

Perhaps as important as what to look for is what to avoid when considering an IVA vendor. Consider the following:

  1. A Vague Approach to Communication: As briefly touched on above, one of the greatest difficulties QHPs experienced during the pilot year was miscommunication or lack of communication between QHPs and their IVA entities. A capable IVA vendor should have a clear-cut approach to dialogue that leaves absolutely no doubt in a QHP’s mind that lines of communication will remain open, that pertinent information will be conveyed in a timely manner, and that issues will be tackled when and as they arise.
  1. Lack of Proficiency in Risk Adjustment: While medical record coding and general audit experience are important attributes to consider when selecting an IVA vendor, expertise in risk adjustment is, bar none, the true hallmark of a well-positioned IVA entity. From performing chart reviews, conducting risk adjustment audits, and identifying missed HCCs; vendors with demonstrable experience in risk adjustment should be considered immediate forerunners.
  1. Flimsy Work Plans: Examining an IVA entity’s work plan can provide invaluable insight into an organization’s overarching philosophy. While work plans that allow for a certain degree of flexibility should be lauded, flexibility should not be confused with a lax approach that fails to be proactive when proactivity is required. For instance, we’ve heard from a few QHPs that interaction with their vendor did not begin until well after the audit sample was received from CMS. This “late out of the gate” approach should be considered a serious red flag.
  1. Everything for Nothing Pricing: As we mentioned in the previous section, the IVA is a complex audit with demands that fluctuate from QHP to QHP. As such, a “universal” pricing strategy should be considered a warning sign that the service offered is either overpriced or that the offering lacks some desirable features that allow for ensuring accuracy and thoroughness. Vendors should be expected and able to clearly state a base rate and describe specific circumstances when the fee for the audit would either increase or decrease.

By adhering to the above recommendations, QHPs should find themselves well-positioned to vet and select a qualified vendor with the attributes necessary to successfully navigate the oftentimes perilous IVA process. As this year marks the start of IVA outcomes carrying real consequences to QHPs’ risk adjustment payments and charges, the case for picking a contender over a pretender by the April 14th – April 28th 2017 designation period has never been stronger.

Photo – Copyright: sindlera / 123RF Stock Photo

About the Author

Kim Browning is Executive Vice President of Cognisight, LLC, a nationally recognized organization specializing in risk adjustment services for Medicare Advantage Plans, PACE Plans, Accountable Care Organizations, and Qualified Health Plans operating on and off the Health Insurance Exchange. She can be reached by phone at 585.662.4215 or via email at kbrowning@cognisight.com


[1] 81 FR 61455 – Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2018

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