May 17, 2016

Mike Adelberg: CMS Ties Enforcement Actions to Financial Audit, Strengthens Regulatory Hand

In its 2017 Call Letter, the Centers for Medicare and Medicaid Services (CMS) introduced a provision that experts say has gone mostly overlooked, but should be taken seriously. The letter introduced the possibility of levying enforcement actions—such as civil monetary penalties (CMPs)—in connection with findings of financial audits of Medicare Advantage organizations and prescription drug plans. These “one-third financial audits” are separate from broader program audits, and have typically not been subject to enforcement actions.

“While CMS does not explicitly state this, it is likely that CMPs resulting from the financial audits would tie into the larger past performance evaluation process,” Mike Adelberg, senior director for FaegreBD Consulting, told Medicare Advantage News. “This means that a poor financial audit result, because of the points assigned to the fine, could have significant implications well beyond the audit.”

“Across the Medicare Advantage program, CMS appears to be strengthening its regulatory hand,” Adelberg said. “This provision is a small piece of a larger trend.”

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