The process of risk adjustment is a complex and often misunderstood one. However, it is essential to ensure that payers and providers are appropriately compensated for taking on high-risk beneficiaries, a core goal of both Medicare Advantage and the Affordable Care Act.
Identifying High-Risk Beneficiaries
For health plans to be reimbursed for the costs of serving high-risk beneficiaries, they must be able to identify and document the full disease burden accurately. This process is referred to as risk adjustment. It is also used in public health insurance exchanges and some state Medicaid programs.
The Centers for Medicare & Medicaid Services (CMS) uses claims data to calculate a risk score that predicts how much money the plan will receive for each beneficiary. This score is based on the patient’s demographics and medical diagnoses.
To ensure accurate capture of risk scores, CMS requires healthcare providers to submit claims for each chronic condition that affects the patient’s health status at least once a year.
Developing a Risk Assessment
A medicare advantage risk adjustment process is a complex process that ensures that all data related to an individual member’s health conditions and medical care is accurately documented. The information is used to calculate the risk score for the member and determine how much the Centers for Medicare & Medicaid Services (CMS) will pay for that member’s care.
This process is important to the healthcare industry because it identifies beneficiaries with a high risk of developing chronic conditions or other health problems that can lead to high costs and long-term disability. As a result, CMS pays health plans based on the expected costs of these members’ predicted medical expenses and preventive care.
The process also entails the development of a risk adjustment strategy, which will guide the plan on how it will manage its high-risk beneficiaries. It is important to have a strategy in place because it helps to identify the potential risks that may affect a member and to prioritize the next steps in monitoring and auditing activities.
In addition, the Hierarchical Condition Categories (HCCs) that are used in risk adjustment can be confusing to many coders. HCCs are groups of clinical conditions that CMS assigns to each beneficiary.
This can make it difficult for a coder to understand the full scope of a member’s health problem and correctly code it on claims. This can lead to overpayments from both the government and the insurance company.
Developing a Risk Adjustment Strategy
A risk adjustment strategy aims to maximize predictability in a health plan’s risk scores while minimizing the administrative burden on states and insurers. This involves a combination of policy and operational decisions that will impact the entire program.
Insurers have traditionally focused on developing risk adjustment models that effectively predict Medicare Advantage members’ future health costs. The Centers for Medicare & Medicaid Services (CMS) uses these models to determine whether or not a Medicare Advantage plan should be reimbursed based on its enrollees’ predicted health costs.
However, Medicare Advantage plans face numerous challenges that may limit their ability to meet the program’s performance goals. One of the biggest challenges is ensuring that health plans’ risk adjustment data are accurate and complete.
As a result, health plans must accelerate their development of a cohesive approach to risk adjustment to improve their performance. This approach includes enhancing member and provider engagement, implementing technology to capture data at the point of care, and reducing claims inefficiencies and poor provider documentation.
For health plans to successfully implement a risk adjustment strategy, they must first identify their high-risk beneficiaries and develop a risk assessment tool to assess each beneficiary’s unique risks and needs. This can be done with various tools, including the Medicare Advantage Hierarchical Condition Category (HCC) model and the prescription drug hierarchical condition category (RxHCC) model.
A streamlined risk adjustment strategy incorporating these tools will help health plans achieve a more accurate and consistent system of determining beneficiaries’ expected future healthcare costs. This will improve members’ experience with the program and enable them to benefit from it the most. It will also allow health plans to capture and use more valuable information to help them make more informed decisions about the care they provide.
Developing a Risk Adjustment Plan
Implementing a Medicare Advantage risk adjustment plan requires different components, including developing a methodology for calculating individual health plan scores. This method also must calculate a composite score for all of a plan’s enrollees for any given period, such as a quarter or a year.
Developing a risk adjustment methodology is relatively straightforward for plans with a large number of beneficiaries who are enrolled consistently. However, the methodology should also account for the high turnover of members in the individual and small-group markets.
A risk assessment tool will calculate individual health plan scores for each enrollee based on that person’s specific medical diagnosis. If a patient has more than one chronic condition, each diagnosis will be categorized into a group of similar conditions called “hierarchical condition categories.”
In addition to using these medical diagnoses, the risk scoring system also considers how much those illnesses cost a plan over a year. Rather than just one year’s worth of claims, this data can be updated yearly so that the risk score for each enrollee is constantly changing.