Medicare Risk Adjustment (MRA) is a payment methodology that is used to adjust Medicare health plan payments based on the health status and demographic characteristics of the beneficiary. For physicians, accurate MRA coding and documentation is necessary for appropriate payment from Medicare Advantage (MA) plans that cover patients with serious medical conditions.
What is Risk Adjustment?
According to the Centers for Disease Control and Prevention (CDC) up to 86 percent of all health care spending in 2010 was for people with one or more chronic medical conditions.
About one in four Medicare beneficiaries get their Medicare coverage through Medicare Advantage (MA) plans. The Centers for Medicare and Medicaid Services (CMS) reimburses health plans on a risk-adjusted basis – patient health risks are adjusted using variables such as age, gender, previous health history, and the presence of chronic conditions. Medicare risk adjustment is based on the premise that care is costlier for Medicare beneficiaries with chronic or serious health conditions than for their counterparts.
Risk adjustment has two main benefits:
- It decreases the risk to each plan of enrolling a disproportionately larger number of more seriously ill people
- It decreases the motivation for plans to confine selection to healthier enrollees
MA plans focus on diagnoses to demonstrate the need for higher reimbursement rates for patients who have more serious conditions to manage. Top risk-adjusted conditions include:
- Coronary artery disease (CAD)
- Congestive heart failure (CHF)
- Diabetes w/o complications
- Vascular disease
- Specified heart arrhythmias
- Breast, prostate, colorectal and other cancer tumors
- Angina pectoris
- Ischemic or unspecified stroke
- Rheumatoid arthritis (RA) and inflammatory connective tissue disease
The focus on diagnosis indicates the key role of physicians in risk adjustment.
Physicians and Risk Adjustment
About 90 percent of the diagnostic information submitted to CMS comes from provider claims data. Therefore proper documentation of visits and diagnoses in the medical records of Medicare beneficiaries is necessary to determine patient risk scores and calculate payment. Physicians should know that “If it’s not documented, it didn’t happen”.
The risk adjustment diagnosis codes and demographic data reported for one year are used to determine payment for the next year. This underlines the need for physicians to document patient health information accurately as well as before CMS deadlines:
- for appropriate Medicare reimbursement, and
- to ensure that plans exceed the targets that CMS sets, which is crucial from the payer’s point of view to extract savings from updates to the benchmark
The Hierarchical Condition Category (HCC) Model
Medicare uses the Hierarchical Condition Category (HCC) model to calculate payments to providers and MA health plans. HCCs are disease groups organized into body systems or similar disease processes. This means that when documenting all chronic conditions, physicians need to think of every related organ system. The main challenges involved in HCC coding are:
- In ICD-10, the CMS General Equivalence Mappings of codes may reflect over 11,000 HCC codes
- HCCs must be reported every 12 months for CMS to reimburse the MA plan, and failure to keep the deadline would delay payments for that MA plan
How MRA/HCC Coding Services Help
Accurate and timely MRA/HCC coding and complete clinical documentation are the key to appropriate physician reimbursement for MA plans. A professional medical coding company can provide physicians with comprehensive support to get maximum Medicare reimbursement.
ICD coding errors affect not only reimbursement, but also patient care, resulting in risks of malpractice or abuse. Reliable Medicare risk adjustment coding services help physician practices submit diagnoses accurately and achieve
- Coding to the highest specificity for care for high-risk, high-complexity conditions
- Periodic review of codes to account for changes
- Maximization of risk scores
- Submission of complete and accurate data before CMS deadlines
- Ensure proper reimbursement
- Avoid compliance risks and charges of fraud
As clear, accurate, and thorough supporting documentation is necessary for assigning the correct codes, a reliable company would also educate physicians on documenting care.
CMS uses RADV or Risk Adjustment Data Validation to validate the accuracy of the HCCs (Hierarchical Condition Categories) that are submitted for payment by MA health plans. The experienced certified coders in a professional medical coding company can provide RADV pre-audit services, mock audit services, and consulting services to verify documentation on all diagnosis codes in chart and codes targeting HCCs, so that errors, if any, can be corrected before submission for payment.
Not paying attention to maintaining good documentation practices and coding of high-risk, high-complexity conditions risk will lower Medicare payment. By partnering with an experienced medical coding company, physician practices can rest assured that this will not happen.
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