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HRADV (HHS Risk Adjustment Data Validation)

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HRADV (HHS Risk Adjustment Data Validation)

Mar 31, 2025
7 minutes

What is an HRADV?

HHS-RADV, AKA: “HRADV,” or HHS Risk Adjustment Data Validation, is a program conducted by the Department of Health and Human Services (HHS) to validate the accuracy of data submitted by issuers for risk adjustment transfer calculations, ensuring the integrity of the risk adjustment program. Issuers who participate in the ACA (Affordable Care Act) must participate in the audit each year which audits the previous years data for accuracy. Issuers choose an IVA (Initial Validation Auditor) who audits three main areas to include:

  1. HCC (Hierarchical Condition Category) validation by reviewing the accuracy of ICD-10 (diagnosis) codes that were reported which carry risk adjustment factor values that affect payments toward those patients concurrent and future care. These HCC’s contribute toward accurate accounting of each patient’s RAF risk adjustment factor) score.
  2. RxC validation of targeted high cost drugs chosen by HHS for review for accuracy.
  3. D&E (demographic and enrollment) validation of a sample of members to ensure those processes are accurate.

There is then an SVA (Secondary Validation Auditor) chosen by HHS who reviews a sample of the IVA’s work for accuracy.

How RAF Scores are Calculated (A simplistic overview)

A Risk Adjustment Factor (RAF) score is calculated by combining demographic factors (like age, sex, and residence) with a patient’s disease risk score, which is determined by their Hierarchical Condition Category (HCC) codes based on diagnoses and the current year’s medical history. The RAF score is calculated by combining the demographic factors and the disease risk score (HCC’s). Average Score: A RAF score of 1.00 represents the average expected cost of care for a patient in a given year. Higher Scores: Scores above 1.00 indicate a higher expected cost of care, reflecting patients with more complex health conditions. Lower Scores: Scores below 1.00 suggest a lower expected cost of care, indicating patients with fewer health conditions. Accurate RAF scores are essential for ensuring that healthcare organizations receive adequate funding to cover the costs of treating their patients. Funding may be redistributed for HHS ACA issuers after the completion of the RADV audit as needed, or funding may be returned to CMS for a Medicare Advantage RADV when overpayments are found.

1. Demographic Factors:
    • Age: Age is a key factor, as healthcare costs tend to increase with age.
    • Sex: Gender can also influence healthcare needs and costs.
    • Residence: Whether a patient lives in the community, a skilled nursing facility, or another institution affects the expected cost of care.
    • Disability Status: Disability status is another factor that impacts healthcare needs and costs.
    • Medicare/Medicaid eligibility: Medicare/Medicaid dual eligibility and Medicaid eligibility, as demographic factors, can influence Risk Adjustment Factor (RAF) scores, potentially leading to higher scores for dual-eligible beneficiaries due to increased healthcare needs.
2. Disease Risk Score (HCCs):
    • Hierarchical Condition Category (HCC): HCC’s are groups of diagnoses that are associated with certain levels of healthcare costs.
    • HCC Weights: Each HCC has a specific weight, reflecting its contribution to the overall RAF score. In the Medicare Advantage (MA) HCC model, these are standardized. In the ACA HHS HCC model, these are further affected by age group and metal levels of the plan each patient is covered under. (HHS HRADV also reviews patient samples of those with no HCC’s reported at all.) These HCC values are affixed to ICD-10-CM diagnosis codes which are coded using International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) codes, which are then mapped to the HCC’s and are reported throughout the year from claims submitted on the EDGE servers for HHS.
    • Condition Count: The number of HCC conditions (by diagnosis code) a patient has each year influences their total RAF score. The more conditions, the higher the risk score. Each HCC-weighted ICD code is only counted once for each calendar year. Some diagnoses are superseded by others in the same hierarchy, and some carry combinations of more than one value, so accurate diagnosis reporting to the highest specificity is important for clarity.

Choosing the Right IVA Auditor: Why Experience Matters

Each year, the U.S. Department of Health and Human Services (HHS) conducts an audit of health plans participating in the Affordable Care Act (ACA). This Independent Validation Audit (IVA) ensures the accuracy of submitted claims data, including diagnosis codes, membership data, and high-cost pharmaceutical expenses from the previous year.

Selecting the right IVA auditor is critical—millions of dollars are at stake. In recent years, we have observed some troubling trends:

  • Inexperienced auditors misapplying guidelines and erroneously denying thousands of valid diagnosis codes. These errors can lead to significant financial losses for health plans, impacting their ability to serve their members effectively.
  • We have also witnessed AI being used that is clearly not being checked properly for accuracy, allowing for an inflation of new codes that are not supported later in audit work.

As a seasoned IVA auditor since 2015, we have deep experience navigating the complexities of these audits. Prior to the pandemic, we were a key contributor in shaping audit guidelines, working directly with HHS and major national clients (issuers) to clarify standards and improve audit accuracy. After stepping away for a short period, we are now re-emerging into the space—bringing a level of expertise that many other auditors lack.

When selecting an IVA auditor, health plans should prioritize experience and accuracy over cost alone. Our approach ensures:

  • Accurate and Ethical Validation: Every correct diagnosis is validated, while only inaccurate ones are appropriately excluded while simultaneously leaving no valid HCC behind that may have been previously overlooked.
  • Proactive Collaboration: Weekly updates keep health plans informed, and we work closely with teams to secure chart access and verify membership and pharmaceutical data.
  • Efficient and Timely Reviews: Our team consistently completes reviews ahead of schedule, reducing stress for health plans and ensuring compliance well before deadlines.

Health plans cannot afford to risk their financial health and regulatory compliance on poorly conducted audits. By choosing an experienced IVA auditor with a proven track record, they safeguard their revenue and maintain the integrity of their data submissions.

Choose Health Administration Advisors, LLC, dba Refinica for Your IVA Needs

We are an auditor committed to accuracy and defensive coding strategies, and we offer ongoing support in the defense of any diagnoses we validate as your auditor. We are honest about any issues with diagnoses that are unable to be validated with clear reasons that affect that decision, along with actionable plans for avoiding issues in the future. Clients simply cannot get this level of expertise anywhere else. Not only do all our senior coders have deep industry experience serving as an IVA for both Medicare Advantage and HHS ACA issuers, but they also serve on major cases on other national audits in expert legal chart reviews.

If you are looking for an IVA auditor with deep expertise, a commitment to accuracy, and a track record of collaboration and efficiency, we welcome the opportunity to partner with you. Contact us for an introduction.

Additional benefits:

  • Deep industry knowledge & analytics to help maximize your chart-chase strategy for best record selections and closely work with our experienced retrieval team
  • SOC2 Type II certified web-based application with detailed reporting with advanced technology for accurate coding
  • We employ a proprietary defensive coding audit and review for accuracy as well as identifying any new HCC’s
  • Ongoing, continual IRR of all coders with 100% review of all charts & an additional review for any unsubstantiated HCC’s
  • Weekly reporting with access to our platform in a “view only” ability to up to 2 members of our client teams for transparency
  • For D&E, we easily manage auditing for enrollment, rating area, premium validation, date of birth, gender, & effective dates
  • For RxC validation we utilize experienced staff with an understanding of the data being validated
  • We provide support with every validated HCC, and offer support for any appeals process when needed

See the below timeline for the 2025 HRADV provided by HHS:

HRADV_2024_Benefit_Year_Timeline_5CR_030725

 

 

DisclaimerAll posts and materials posted here are for education and demonstration purposes and are not intended to be medical advice. It is important to remember that every person is unique with unique diagnoses, and may be taking different prescriptions and supplements. We encourage each person to discuss your conditions with a trusted healthcare provider and be engaged to learn along your individual path to wellness.

Brian Boyce, MHA, BSHS, CPC-I, CRC, Cert. Clinical Bioethics

Brian holds a master’s degree in health administration (MHA) from The George Washington University’s Milken Institute School of Public Health, a Bachelor of Science in Health Sciences (BSHS) from Old Dominion University, and is a Certified Professional Coding Instructor (CPC-I), ICD-10 Trainer, and certified in Clinical Bioethics through a 2-year immersive program from Georgetown, which bestows the ability to serve on ethics boards, help make healthcare decisions as a bioethics consultant, and provide continuing medical education. He is a USAF veteran who began his healthcare career providing clinical care in aeromedical evacuation.