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Healthcare risk adjustment - your top ten questions answered


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Risk adjustment is a modern payment model which uses both demographics and diagnoses to determine a risk score which predicts how costly the individuals care will be for the coming year. This presentation reviews common questions related to HCC scores and how to minimize risk associated with risk adjusted payment models.

Published in: Health & Medicine
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Healthcare risk adjustment - your top ten questions answered

  1. 1. Healthcare risk adjustment – Your top ten questions answered
  2. 2. 1. What is healthcare risk adjustment? The most prevalent risk adjusted model is the CMS model called hierarchical condition categories also known as HCCs. Risk adjustment is a modern payment model which uses both demographics and diagnoses to determine a risk score which predicts how costly the individuals care will be for the coming year. Hierarchical condition categories have been around for a while but primarily used for Medicare advantage plans.
  3. 3. The idea is to pay more to providers with more complicated patients. The HCC model encourages providers and health plans to take care of more complex patients ensuring that Medicare beneficiaries receive high quality care. Payment to providers is based on the individual’s risk adjustment score. 2. Why did CMS implement HCC methodology?
  4. 4. 3. How are risk adjustment scores calculated? HCCs are similar to DRGs in that patients are grouped into categories who are expected to have similar cost patterns. Groups of similar diagnoses consume similar resources. Each HCC is assigned a “weight” that impacts the patient risk score and determines payment. Two components of risk factors are used. The first risk factor is the demographic factor. The second factor is the HCC risk factor which is the disease burden component determined by the individual’s diagnoses. Each member is assigned a RAF or risk adjustment factor that identifies the health status of the patient.
  5. 5. 4. What does the demographic component include? The demographic component includes age, sex, disabled status, eligibility status and whether the member lives in a community or institution.
  6. 6. 5. What does the disease burden component include? There are more than 3,500 diagnoses codes that affect the HCC of an individual. Some of the most common are chronic conditions including chronic obstructive pulmonary disease, vascular disease, congestive heart failure and diabetes mellitus. HCCs are additive meaning that multiple chronic conditions result in a higher total HCC risk factor.
  7. 7. More than 75 million individuals are currently covered by a risk adjustment payment methodology. 6. How many patients are covered under the risk adjustment model and is there a benefit for the patient? Under the risk adjustment model, higher-risk patients are able to find and afford health insurance. There is also improved opportunity for patients to be identified for care management programs or disease intervention programs.
  8. 8. 7. How is diagnoses data used in the calculation of risk adjusted scores? Diagnoses are reported using ICD-10-CM codes. Not every diagnosis will “risk adjust,” or map to an HCC. Acute illness and injury are not as reliably predictive of ongoing costs, as are long-term conditions such as diabetes, chronic obstructive pulmonary disease (COPD), chronic heart failure (CHF), multiple sclerosis (MS), and chronic hepatitis; however, some risk adjustment models may include severe conditions relevant to a young demographics (such as pregnancy) and congenital abnormalities. The diagnosis codes are submitted on claims based on the face-to-face encounter clinical findings.
  9. 9. 8. How can providers prepare for payment under an HCC model? Providers should audit their documentation ensuring that the patient’s clinical conditions are fully described in clinical documentation. • Monitor and decrease use of unspecified ICD-10 diagnosis codes. Unspecified ICD-10 diagnosis codes do not fully describe the patient’s clinical condition. • ICD-10 coding should also be audited. • Education and training should be conducted based on the results of the audit. • Conducting an annual audit will ensure documentation and coding accuracies are sustained.
  10. 10. 9. Is it possible for providers to lose financial opportunities under the HCC payment program and how can that risk be minimized? If medical documentation lacks the accuracy and specificity needed to assign the most appropriate ICD-10 diagnosis code, providers face the possibility of reduced payment in a performance-based payment model. If a chronic condition is not documented yearly, the diagnosis will “fall off” and not be included in the HCC calculation possibly lowering the risk adjustment score. Good clinical documentation and accurate ICD- 10 diagnosis coding will paint a complete clinical picture of the patient allowing the correct RAF score to be calculated and proper payment received.
  11. 11. 10. What are some common risk reduction strategies that can be implemented for strong performance under the HCC payment model? • Document and code all chronic conditions. • Clarify whether a diagnosis is current or “history of”. • Update the patient’s problem list regularly. • The superbill is important but don’t use for code assignment. • Increase providers’ coding depth. • Avoid using generic or unspecified codes. • Link manifestations and complications.
  12. 12. Hospitals may think that DRG optimization is a solved problem, but inpatient coding accuracy for ICD-10 is only around 61%. BESLER’s Revenue Integrity Service can often improve accuracy without the need to purchase or learn costly software, potentially increasing inpatient revenue and reducing compliance risks. Watch a short video that explains how BESLER can help improve Revenue Integrity at your hospital