8 Best Practices for CMS Independent Validation Audits and Program Audit Close Out

By Yvonne Zachman Fiedler & Alexander Henrichs
Tue, Sep, 17, 2019

More rigorous requirements for conducting the CMS Audit Validation and Close Out are posing new challenges for health plans facing scheduled CMS Program Audits in 2019 and beyond. It’s critical that compliance staff understand how the new CMS Audit Validation and Close Out process works and plan for it well in advance to ensure a successful outcome.

The Audit Validation and Close Out process is the final phase of a scheduled CMS Program Audit. The goal is to ensure that the sponsoring health plan substantially corrects all non-compliant findings and conditions that were found during the initial CMS Program Audit. CMS reviews the results of the Validation Audit to determine whether it can officially close the sponsoring health plan’s Program Audit.

In 2018 CMS clarified the requirements for how health plans must perform the Validation Audit. For sponsoring health plans that have scheduled audits occurring this year and beyond, this will be the first time they will be subject to this more structured and rigorous process:

  • The Validation Audit can be conducted by either CMS or by an independent auditor hired by the sponsoring health plan, depending on the number of conditions cited in the final report.
  • The sponsoring health plan must first submit to CMS for review a Validation Audit Work Plan. This work plan must be approved by CMS before work commences. The work plan will specify, among other things, what data universes will need to be provided and the methodology that will be used to select samples. This process always existed but in 2019 we have seen this process become more formalized and specific.
  • For most conditions, 10 samples must be selected.
  • If the samples provided fail (are found non-compliant) for the cited condition or for another issue identified, the sponsoring plan must then provide a completed impact analysis and root cause analysis to be submitted with the validation audit report to CMS.

Sponsoring plans must now provide greater levels of documentation and a consistent number of case file reviews than previously required. This not only increases work levels for the plans – it also exposes them to greater levels of risk. That’s because the greater the number of files reviewed, the greater the risk for human error in one of those files selected.

Based on The Burchfield Group’s experience in this realm, here are 8 best practices for health plans worried about how to meet the new Audit Validation Requirements:

  • Give yourself plenty of extra time to plan for the Validation Audit. Don’t wait until after the program audit is conducted and CMS tells you to do a Validation Audit. Instead, start planning for a potential Validation Audit as soon as you receive your notice of a scheduled CMS Program Audit.
  • Request an extension if you need one. Sponsoring health plans undergoing a scheduled program audit have 180 days from the date all Corrective Action Plans (CAPS) are accepted by CMS to complete and submit a Validation Audit to CMS. However, you can ask for more time if special circumstances warrant, such as if your organization recently implemented new systems. In our experience CMS would prefer to approve an extension than to deal with a failure. It’s in everyone’s best interest to have a clean validation audit.
  • Conduct the appropriate level of oversight and planning ahead of time. Essentially, understand your work plan and create oversight activities for each sited condition that are in line with the work plan. In general, plans that fail the Validation Audit and Close Out haven’t performed sufficient ongoing oversight of the process.
  • A good practice is to have a process in place to evaluate your operational dashboard on an ongoing basis. Holding weekly meetings and running monthly reports under the guidance of an experienced validation audit consulting firm offers the opportunity for practice and learning to help ensure your data will be clean. These activities will help compliance and other teams identify existing or emerging problems so they can be corrected in a timely manner.
  • Some plans utilize an additional external firm to assist them in the preparation process and to help verify that their “clean’ period is actually clean. Although this adds cost to the process it may provide better outcomes on the validation audit,
  • Remember that if the independent outside auditor discover new issues or conditions while performing the validation audit that did not appear during the program audit, the auditor is now required to report it to CMS.
  • Make sure you research and select a reputable, experienced firm that can perform independent audit validation or provide validation audit consulting to help you identify problems that you and your teams might not be able to identify on your own.

The validation audit is an important step in closing out the CMS program audit cycle. Remember to begin your search for an independent auditor even before CMS completes its portion of the program audit.With the right preparation and support your health plan can complete this efficiently and become stronger in your overall CMS compliance efforts.