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Preparing Risk Adjustment Solutions for a Post-Crisis World


Risk adjustment has always been a challenging endeavor, but one essential to fairly compensate payers for taking on patients who are more likely to have high healthcare costs.

Government programs, such as Medicare Advantage (MA), The Centers for Medicare and Medicaid Services (CMS), and Affordable Care Act adjust their reimbursement and provide revenue to payers to accurately reflect the health costs of those covered. For plans and payers participating in these programs, an accurate risk score is crucial to predicting the cost of care for patients.

Payers utilize an actuarial tool in the risk adjustment model to get a correct estimate of how much care and coverage of a patient will likely cost in the future. This tool is based on their demographics, current and previous health history, and any relevant health factors.

Each patient is assigned a risk adjustment factor (RAF) based on their calculated score. RAF determines the amount of risk that the individual will face higher medical expenses in the future. This means that healthier and younger patients typically have a lower RAF. In contrast, those with a chronic health condition or are older have a higher RAF because of their higher likelihood of expenses.

Risk adjustment, then, is critical to the accuracy of value-based models and the livelihood of risk-based organizations (RBOs). Yet, risk adjustment faces new challenges as healthcare evolves and adapts to new standards. RBOs need new solutions and help to meet changing patient habits and rising situations.

For the past two years, many healthy people have avoided routine health screenings to lower their risk of contracting COVID-19 and the overall healthcare burden overwhelmed with the virus. As more people are starting to go back to the doctor, there will be an increase in conditions that would have been screened and accounted for years before if there was not a virus.

As a result, risk adjustment is becoming more complicated and essential than ever. To fully understand it, we need to look at where it’s been, the new challenges to risk adjustment, and the solutions that health plans and payers need for success.

An Overview of Risk Adjustment: The Resurgence of Value-Based Care

The healthcare industry has increasingly transitioned away from the most traditional fee-for-service reimbursement model and embraced the value-based reimbursement model. Because of this transition, a growing number of providers are forming risk-bearing organizations (or RBOs).

Risk-bearing providers are a growing trend, but it is far from a new movement. Organizations back in the 1990s started transitioning to RBOs, especially on the West coast. However, it failed to transition to the rest of the United States, and many stayed with the more traditional reimbursement models.

However, this has increasingly changed over the last decade. CMS structured risk adjustment puts more competition at the health plan level to encourage providing more services. It has come a full circle as the rest of the United States has embraced the RBO structure that rewards them for achieving improved health outcomes, reducing costs, and enhancing the patient experience. The critical defining feature of an RBO is that all the providers share in both the financial gains for efficient and effective care, as well as the financial losses (to an extent) if the cost exceeds the established targets.

Sharing risk and providing value-based care is becoming increasingly popular: experts estimate that the value-based care market will reach $7.3 billion by 2027 and enjoys an annual growth rate of 20.3 percent.

As a result, providers were able to ditch the race-to-the-bottom for services excluding those with expensive medical conditions. Instead, risk adjustment encourages providers to care for the population as a whole and contribute to the formation of the population health industry. RBOs are finding innovative ways to care for the entire population, both the extremely healthy and the extremely sick and everyone in between.

Not only are payers and providers finding that they can provide better care, but patients are increasingly opting to participate in these programs. In 2021 there were more than 26 million people enrolled in an MA plan, which accounts for 42 percent of the total Medicare population. It also accounts for $343 billion of total Medicare spending, about 46 percent of their total spending. Health plans need to adjust to account for this rising market, and risk adjustment is a critical part of that.

The rise in RBOs, whether independent practice associations, risk-bearing entities, physician-hospital organizations, or accountable care organizations, means risk adjustment is more critical than ever.

The Current Challenges Facing Risk Adjustment: The Post-Pandemic Crunch

While the COVID-19 pandemic is no longer the emergency it was for the past two years, its current effect on risk adjustment continues. Health systems and plans were facing losses due to deferred care and abandoned elective procedures resulting from the pandemic.

While many look to risk adjustment to moderately mitigate these losses, it comes with its challenges. However, new solutions can enhance the tedious patient review process to give providers the critical insights needed to capture their high quality of care and provide a complete view of each patient’s health status.

This grows even more important as formerly healthy patients who avoided routine check-ups are now finding themselves in more advanced medical situations and experiencing serious illness. Providers now have to find a way to get these patients back in through the system to get the care that they deferred during the pandemic. It’s a challenge for providers, population health, and risk adjustment.

Some of the difficulties that health plans faced before are now becoming even starker during this scramble to serve even more patients:[CW2]

Chart Retrieval

The pandemic caused a temporary lull in medical records requests as most payers suspended audits and reviews to give providers the time and energy they need to focus on patient care.

However, this number of requests is expected to be in a steep upswing as the health crisis improves.

More than 100 million medical record requests are made every year, and 90 percent of them are fulfilled manually with traditional paper, mail, and fax. Payers and health plans need to be more proactive about retrieving charts and getting them ready for adjustment. Going back to providers repeatedly for proper documentation slows down the process.

This means that health plans and payers need to help providers provide proper documentation the first time. Building relationships with them and paying attention to trends in charting are critical for success.

HEDIS Scores

Almost every health plan and payer prioritizes improving their Healthcare Effectiveness Data and Information Set (HEDIS) scores. It is critical to attract new patients and stand out from the competition. Plus, HEDIS data enables plans to:

  • Track improvement
  • Find areas that need improvement
  • Compare between plans
  • Measure the success of any efforts for quality improvement

HEDIS scores are becoming even more critical as they are more aligned than ever with risk adjustments. They allow value-based care providers and payers to pursue their ultimate values: improved quality, enhanced value, and better patient satisfaction. It’s critical that health plans assess their quality performance regularly.

However, it can be challenging to find ways to improve HEDIS scores. Getting charts and working with providers with various electronic medical records (EMR) systems can make aggregating data complex. Plus, getting providers to respond and release records is another challenge. Managing HEDIS and gaining insights from it can be complicated, but it is necessary for the organization’s overall success.

Many payers and health plans are turning to partners to help them meet the challenge of improving their HEDIS scores. Integrated HEDIS solutions offer real-time and retrospective data that enables deep and practical insights for better care quality, delivery and overall member satisfaction. The right platform will offer transparency while still maintaining cost-effectiveness.

Growing Complexity in HCC Coding

In the past, risk adjustment was done manually. Coders would comb through thousands of pages of patient charts to document chronic conditions. However, this is not an effective or efficient use of coders’ expertise. Plus, it is time-consuming and costly. Coders were often bound to slow and disruptive chart retrieval processes.

Not only was the process challenging and inefficient for coders, but it caused problems for managers, providers, and payers. Managers find it impossible to check every document for quality, and providers may not have access to the information they need to make medical decisions. Plus, payers struggle to get the charts they need to document their diagnosis codes properly.

Medicare spent $7 billion more on private Medicare Advantage payers than Medicare in 2019. Kaiser noted that inaccurate coding practices could be one driver of this spending disparity. Risk adjustment is increasing in complexity, and some health plans struggle to keep up with accurate hierarchical condition category (HCC) coding. The growth in diagnosis codes, in particular, is a challenge as payers need to keep up with the challenges to remain in compliance.

The number of diagnosis codes is staggering: There are more than 9,500 ICD-10-CM diagnosis codes across 86 different categories for the CMS-HCC Version 24 risk adjustment model alone. For the commercial (HHS-HCC) V07 model, there are more than 11,000 diagnosis codes.

While these codes are critical for compliant and accurate risk documentation, there is an overall lack of guidance on certain crucial issues relating to using them. For example, there is some ambiguity related to which supporting documentation is required for reporting diagnosis. This forces health plans to create their local policies on reporting conditions. These policies must be updated with new CMS guidance, which requires payers to develop processes to stay current and institute policy changes accordingly. It also means that they need to be continually educating their coders and providers on documentation and coding that relates to risk adjustment.[CW3]

Increased Scrutiny from Federal Agencies

For plans that participate in federal programs, accurate risk assessment is critical to predicting the cost of care for patients. Yet, health plans struggle to code correctly, and federal agencies take note.

On September 20, 2021, a report issued by the Office of the Inspector General (OIG) reviewed how MA plans utilize chart review and health risk assessment (HRA) to get higher payments. OIG did not detail any specific wrongdoing, but it stated that the findings were causing an increase in concern “about the extent to which certain MA companies may have inappropriately leveraged both chart reviews and HRAs to maximize risk-adjusted payments.”

Health plans and payers should take note that there is an increase in attention and be on high alert since the Department of Justice (DOJ) as well as the OIG are narrowing their focus on MA plans to enforce the False Claims Act.

MA plans need to prepare themselves for additional scrutiny. In addition, all plans that utilize risk adjustment should also get ready for increased federal oversight and an eventual crackdown on the few organizations that have inaccurate and, in some cases, fraudulent assessments.

As the state of emergency that led many agencies to be lax goes away, health plans need to increase their diligence and compliance effort for risk adjustment. Already, CMS RADV audits are targeting some of the biggest plans across the country. OIG is spending almost a week on-site performing an overview of the entire risk adjustment process.

The Future of Risk Adjustment Solutions: How to Optimize Risk Adjustment

Health plans and payers should always be prepared in case of an audit. These three strategies can help payers and plans optimize their risk adjustment and ensure they are compliant:

#1: Utilize the Proper Resources to Track Regulations

Medical coders have borne the most administrative burden working with HCC models and shouldn’t be underestimated. They are forced to work with multiple sources of regulatory guidance, and each sources issues updated requirements for their programs at different times. Some program updates are released annually, such as Health and Human Service’s ICD-10-CM to HCC Mapping Table, CMS’s  Annual Medicare letter, and Official ICD-10-CM guidelines.

Another critical guide, the American Hospital Coding Clinic, updates its guidance quarterly. Yet, some updates are issued sporadically with no set timetable, such as CMS’ RADV audit requirements. In between these updates, interim guidance can also occur, such as the flexibilities provided during the pandemic.

This dynamic and sporadic environment creates notoriously hard-to-predict regulatory updates and makes compliance challenging to maintain.

Not only are updates problematic to stay on top of, but they often come with little warning and require a short lead time to understand and implement across an organization. Health plans can no longer simply certify coders and provide them with an annually updated manual for them to adhere to regulations successfully. All stakeholders in risk adjustment now have to remain vigilant and monitor all of the periodic and annual publications from the government and significant agencies. Every update could potentially have a substantial impact on plan policies and procedures.

 Because of the sheer volume of this undertaking, plans need to find partners who offer the amount of support they need to stay compliant. Partners need to have a core competency in medical content to stay current on the multitude of regulatory updates. Compliance-based partners can capture or provide actionable suggestions with reports. Ensure that your partner has a certified coder who can enable you to properly document HCC patient treatment.

#2: Provide All Stakeholders With the Proper Education

To maintain accurate risk adjustment, patients need to be seen by a provider annually with all diagnoses correctly documented, managed, and coded by the provider. Plans and payers need providers to capture the correct diagnosis information that will enable them to maximize their reimbursement and reduce the risk of an improper payment. However, documentation today is not always completed as thoroughly as needed.

In fact, CMS estimates that almost 10 percent of payments to MA organizations are incorrect, mainly because the organizations submit unsupported diagnoses. Other regulatory agencies are also growing increasingly concerned with diagnosis justification. For example, the OIG is stepping up its efforts to provide more specific adequate submission information.

This increase in concern from regulatory bodies means that wise payers should step up efforts to provide high-quality documentation in the case of an audit.

Education on the latest requirements is critical for stakeholders at all levels. Everyone needs specific information to align them all for a compliant and seamless risk adjustment process from in-house coders to vendors to care providers. Because CMS is vague on appropriate supporting documentation, wise plans will need to provide healthcare providers with formal training on clinical documentation that centers on coding for ICD-10-CM and adheres to the plan policies.

Likewise, in-house coders need the proper training and support since they are also responsible for accurately interpreting and instituting all new documentation and coding policies from regulating bodies. They are responsible for taking a position in the case of any ambiguity, establishing a policy, and monitoring compliance for all stakeholders within and outside of the health plan. A payer’s in-house coders are critical as they consolidate, regulate, and communicate the information. They should have regular education and the best resources to work effectively.

 The right tools can provide the proper education and training to minimize errors and maintain compliance. Education platforms give a comprehensive overview that provides critical insights into opportunities for provider feedback and education.

#3: Leverage Technology to Provide Accessibility and Enable Interoperability

The sheer volume of work and knowledge required to maintain compliance are impossible to track manually. Technology is critical for maintaining a single source of truth for both coding and regulatory guidance. However, it does not exist in many organizations. Many payers and health plans have inconsistencies in how they house the different guidelines and policies and how they provide stakeholders with the information they need. The confusing and manual processes make it challenging for everyone involved to find the information they need.

However, the right technology streamlines this process and enables plans to communicate policy updates to internal and external members who need it to carry out their jobs.

With a single dashboard for chart acquisition, increasing retrieval options will increase the likelihood that payers can find exactly what they need from providers. It eases the time-consuming process of retrieving charts and reduces overall provider abrasion.

Insights are also a critical solution for HEDIS improvement. The right technology can offer retrospective and real-time data that enable RBOs and payers to provide higher levels of quality and satisfaction. Data management helps maintain transparency so that payers can quickly identify any gaps in their performance and enforce real-time compliance.

With the right technology, plans can lighten the load of critical personnel by easing the process to streamline changes, communicate policy information, and implement updates effectively across the organization. These technologies include:

  1. AI/ML. Artificial Intelligence (AI) and Machine Learning (ML) are critical ways that organizations can enhance their workflows and reduce the activities that are not essential to patient care. Experts estimate that AI could save the health care industry about $18 billion each year. In particular, AI can help improve accuracy and productivity when it comes to medical billing.
  2. NPL. Although it is a subset of AI, Natural Language Processing (or NLP) is transforming coding all on its own. It can help extract meaning from data to reduce wasted time and improve overall coding. It can summarize lengthy blocks of texts, for example, clinical notes, map critical data elements in unstructured texts, and input them into structured fields in EHR to improve data integrity and do so much more. The market size of NLP for health care is expected to grow to $3.7 billion by 2025.

Applying the right technology can help sustain prompt and effective revenue flows. It also gives plans and payers a framework they can trust in case of an audit.

Get Ahead of Your Crunch Time with a Vendor Solution

Many payers and providers are now finding themselves at capacity and trying to process this influx of patients. However, finding the right technology and engaging with a vendor solution should not happen when payers and health plans are overwhelmed. The time it takes to sign on a solution and get the proper funding means that many organizations cannot bring on a vendor solution in time to help them with their current crunch season.

Don’t wait until you’re at capacity to get help with a vendor solution. It’s a classic mistake that leaves many organizations scrambling to get everything in on time. However, even if you’re at capacity, that doesn’t mean that you should give up yet. As most health plans and payers know, crunch time will come again. Hire a vendor solution now so that your organization does not have to deal with the pain and stress of another hectic season trying to get patients the care they need.

GeBBS Healthcare Solutions: The Modern Technology You Need

GeBBS Healthcare Solutions’  iCode Risk Adjustment platform is a critical solution to the issues faced by payers and RBOs. It offers one convenient self-service tool that helps them improve their workflows and fuels deeper insights essential for success.

GeBBS Healthcare Solutions is a leader in AI-fueled health information management (HIM) and revenue cycle management (RCM) services. GeBBS is dedicated to helping providers and payers achieve interoperability while minimizing costs, increasing profitability and bettering the patient experience.

GeBBS has earned wide acclaim for its scalable, end-to-end HIM and RCM solutions that integrate leading-edge technology and skilled human resources to deliver measurable results. GeBBS is rated as one of Modern Healthcare’s Top 10 Largest RCM Firms, Black Book Market Research’s Top 20 RCM Outsourcing Services and Inc. 5000’s Fastest-Growing Private Companies in the United States.

Connect with us today by visiting gebbs.com to schedule a demonstration and see how iCRA and GeBBS can help your organization succeed in the new era of value-based care.

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