Medicare Compliance & Reimbursement

Understand how more patient diagnoses increase the cumulative risks.

Risk adjustment can help providers and payers predict future costs of patient care and health outcomes based on a myriad of data, which can save money for both.

Details: If you are new to risk adjustment and not sure where to start, instructor Sheri Poe Bernard, CRC, CPC-I, CDEO, CCS-P, gave a high-level review of the topic in the 2021 RISKCON session “Risk Adjustment for Beginners.” Poe Bernard identified what you should consider as you are learning about risk adjustment, as well as which diagnoses actually risk-adjust.

Read on for a deep dive on this hot topic and helpful tactics to implement a risk adjustment program in your practice.

What is Risk Adjustment?

“Risk adjustment is a process by which health insurance plans are compensated based on the health status of the people they enroll, thereby protecting the insurer against losses due to high-risk, high-cost patients,” Poe Bernard said. The payment is adjusted based on patient demographics such as age, disability, financial status, and institutional status. You report the diagnoses with ICD-10-CM codes.

“Under the Medicare Access and CHIP Reauthorization Act [MACRA], the Merit-Based Incentive Payment System [MIPS] looks at risk to determine severity of illness of patients,” Poe Bernard added. “Efficiency is measured based on severity of illness versus resources extended across all sites.”

Hierarchical Condition Categories (HCCs): The severity of illness is HCC-based, she said. HCCs are also ICD-10- CM-based, so ICD coding compliance is paramount.

“You have to be sure that you are doing your ICD-10 coding correctly because if not, you could be overcoding, which leads to many problems,” Poe Bernard advised. Or you could be undercoding, which will hurt your practice because you may not receive your MIPS bonus.

Accountable Care Organizations (ACOs): With ACOs, the shared savings are based on severity of illness and expenditures, according to Poe Bernard. If a patient’s comorbidities do not result in increased utilization because they are being well-managed, for example, then the ACO providers share in the cost savings.

“Many Medicaid plans use risk adjustment to reimburse payers and federal disability. The chronic illness and disability payment system [CDPS] also employs risk adjustment for payers,” Poe Bernard explained.

Affordable Care Act (ACA): Also, risk pools established under the ACA provide risk-adjusted coverage to members, she said. The members pay premiums that go into a risk pool involving multiple layers.

“The HCCs associated with each plan’s members are calculated to determine how the monies are subdivided between plans: the sicker a plan’s patients and the more members insured, the bigger that plan’s piece of the pie,” Poe Bernard expounded. “More than 12 million Americans are enrolled in these plans. These are paid using Health and Human Services [HHS]-HCCs and include pediatric and obstetrical diagnoses.”

See Which Diagnoses Actually Risk Adjust

It’s easiest to consider what is chronic (such as chronic obstructive pulmonary disease — COPD); and acute, severe, and resource-intensive, such as hip fracture, pneumococcus, pneumonia, and acute myocardial infarction (AMI); when talking about risk adjustment, Poe Bernard explained.

Remember that diagnoses are additive, Poe Bernard said. The more risk-adjusting diagnoses, the more cumulative risk the patient carries, and the higher payment made to the Medicare Advantage Organization (MAO) insuring the patient or credit given to providers paid through risk adjustment.

Diagnoses are grouped into less than 90 HCCs, she said. Not all diagnoses risk-adjust, but thousands do.

Some common risk-adjustable diagnoses include the following, according to Poe Bernard:

• Diabetes
• Amputation status
• Skin ulcers
• Heart disease
• Vascular disease
• Hypertension
• Stroke
• Myocardial infarction
• Most cancers
• COPD
• Shock
• Septicemia
• Morbid obesity
• Hypothyroidism.