5 Strategies to Succeed with Risk Adjustment

by | Last updated Feb 22, 2024 | Published on Apr 12, 2023 | Medical Coding

Risk Adjustment
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Under value-based care, providers are reimbursed for better care, not more care. Patients with chronic conditions require more intensive care than patients who are generally healthy. Risk adjustment is an important element of medical billing which focuses on ensuring that health plans and providers receive appropriate payment for the extent of care they provide to patients. Capturing complete demographic and diagnostic information for each patient through proper HCC risk adjustment coding is the key to success in value-based care models. That’s where the support of an experienced medical billing and coding company can prove invaluable for physicians.

Importance of Risk Adjustment

The move from fee-for-service to value-based care is changing not only how patients are cared for but also how providers are measured and compensated for performance. Risk adjustment is important for health plans and patients providing care for high-risk patients.

The Centers for Medicare & Medicaid Services’ (CMS) defines risk adjustment as “a statistical process that takes into account the underlying health status and health spending of the enrollees in an insurance plan when looking at their health care outcomes or health care costs.”

The differences in the health status of patients can significantly affect the cost of providing care. For instance, patients with chronic conditions such as diabetes or heart disease require more intensive care and treatment. Risk adjustment takes a particular patient’s health status, medical history, and other factors into account to calculate the expected cost of care for that patient. This makes risk adjustment important for both health plans and for providers:

  • Risk adjustment is critical to ensure adequate compensation to health insurance plans, so they can maintain coverage and access to care for beneficiaries likely to incur higher than average costs.
  • By determining the payment rates for healthcare services based on the differences in the health status of patients, risk adjustment ensures that physicians receive fair and accurate reimbursement for providing high quality care for patients with complex health needs.

How Physicians can succeed with Risk Adjustment

More and more providers are taking on larger risk contracts under value-based care. To succeed with risk adjustment, healthcare providers need to capture risk correctly. This involves evaluating the severity of a patient’s illness or medical conditions, which can impact the costs of managing their care. Here are 5 strategies that can help physicians succeed with risk adjustment and optimize insurance reimbursement:

  • Accurate HCC coding: Medicare Advantage (MA) plans use the Hierarchical Condition Category (HCC) risk adjustment coding system to adjust payments to healthcare providers and health plans based on the health status of their patients. In the HCC model, patients are grouped into categories based on their medical conditions and health status using ICD-10 codes. HCC risk adjustment coding is different from usual ICD-10 coding because the aim is to report all conditions that affect the individual’s health status at the same time across the continuum of care. Accurate HCC coding is crucial to communicate patient complexity and paint a picture of the whole patient for risk adjustment and obtain fair reimbursement for serving complex patients. Providers need to report active diagnoses, including chronic conditions, annually.

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    • Thorough, quality clinical documentation: Physicians should ensure complete and accurate documentation of patient conditions to support both risk adjustment and quality reporting initiatives. All relevant clinical information including medical history, diagnoses, and treatment plans should be clearly documented. Proper documentation is critical to accurately capture a patient’s true level of illness severity or risk using HCC codes and ensure that the care provided is appropriately reimbursed.

An important aspect of HCC coding is analyzing health record documentation to identify reportable conditions and assigning the correct ICD-10 codes to reflect them. Risk adjustment documentation best practices recommended by AHIMA include:

      • Documenting all cause-and-effect relationships.
      • Clearly linking complications or manifestations of a disease process.
      • Including all current diagnoses as part of the current medical decision-making process and document them in the note for every visit.
      • Documenting diagnoses as “history of” or “past medical history (PMH)” only when they no longer exist and are resolved.

The “MEAT” (Monitoring, Evaluation, Assessment and Treatment) approach is considered best practice for reviewing clinical documentation for HCC reporting.

    • Develop a proper risk capture program: Providers can capture risk correctly by developing a comprehensive, “encounter-centric risk adjustment infrastructure”, according to a report from Health Fidelity. This includes the following:
      • Post-encounter coding review: With a post-encounter coding review, providers can ensure that claims accurately reflect the care provided and diagnoses are adequately validated before they are submitted.
      • Identifying prospective risk capture gapspre-encounter: This involves reviewing all sources of patient data to spot potentially risk-adjustable conditions for clinical review before the encounter. Practices should identify patients with suspected conditions who lack the proper documentation to be submitted for reimbursement. For proper risk capture, the entire care team should be educated on documentation and coding guidelines.
      • Identifying gaps at the point-of-care: This involves documentation of outstanding risk conditions through accurate and complete encounter documentation in the EHR.

By monitoring and tracking patient outcomes at various stages, physicians can identify areas where they can improve care delivery and outcomes. This can also help them identify patterns and trends that may suggest the presence of health risks or conditions.

  • Document social determinants of health: Social determinants of health (SDH) are the non-medical factors, income, education, and housing status that influence health outcomes. As risk adjustment models often incorporate SDH, physicians should be pay attention to these factors and document them appropriately to capture the patient’s true risk.
  • Team collaboration: Physicians should collaborate with care coordinators and case managers to ensure that their patients receive comprehensive, coordinated care. These professionals can help physicians get valuable insights into the patient’s overall health status and also identify areas with potential for risk adjustment.

Following these steps can help physicians succeed with risk adjustment to ensure that their patients receive quality care and to obtain appropriate reimbursement for their services. Partnering with an experienced medical coding service provider can ensure thorough, accurate documentation of patient conditions and coding to support risk adjustment.

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Julie Clements

Julie Clements, OSI’s Vice President of Operations, brings a diverse background in healthcare staffing and a robust six-year tenure as the Director of Sales and Marketing at a prestigious 4-star resort.

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