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Medicare Advantage final rule more favorable than feared, says JPMorgan

After the close last night, Centers for Medicare and Medicaid Services released the final rule for the Medicare Advantage Risk Adjustment Data Validation audits, JPMorgan analyst Lisa Gill tells investors in a research note. The analyst believes the rule is more favorable for managed care companies than some investors had feared, even without a fee for service adjuster. In the final rule, CMS determined that audits prior to 2018 would not be extrapolated to the entire population in each contract selected, the firm points out. It believes improvements in data collection in recent years should result in a lower error rate in more recent audits, and not extrapolating audits prior to 2018 is a net benefit to managed care companies. In addition, the dollar value impact is lower than had been speculated and with payments not starting in earnest until 2025, the industry has time to prepare, the analyst contends.

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