Adopting more efficient ways to collect and analyze patient data for risk adjustments will help health plans maximize reimbursements.
Risk adjustment incentivizes health plans to take on people with pre-existing conditions, and insurers are paying more attention than ever to the importance of gathering the right data to get the most reimbursement they can for each enrollee.
The effort is likely to survive any changes to the Patient Protection and Affordable Care Act.
With about 16 million patients enrolled, Medicare Advantage (MA) covers a substantial portion of the population and most insurers have MA plans they administer on behalf of the Centers for Medicare & Medicaid Services.
To ensure that capitated payments to the health plan accurately reflect the expected cost of each beneficiary's medical care, CMS provides a risk adjustment based on the specific characteristics of each enrollee. They can include medical diagnoses in addition to demographics and Medicaid eligibility.
That adjustment addresses the potential problem of capitated payments incentivizing health plans to enroll only the most healthy patients, but it means practitioners must document clinical diagnoses accurately and insurers must obtain that data.
Otherwise, health plans are leaving money on the table.
The Case for Automation
Leading health plans are moving toward a more automated approach to reviewing charts for information that could justify a larger risk adjustment, but others are still doing it in a largely manual way.
That sets them up for missed reimbursements and compliance issues, says Anand Shroff, chief technology and product officer of Health Fidelity, a company that offers technology and support to companies participating in Medicare Advantage.
"We expect the rest of the market to catch up in about one to three years," Shroff says. "They're waking up to the idea that this can make the difference in your company's revenue, and it is money that is rightly owed by CMS if only they can provide the right documentation."
Health plans are looking for more efficient ways to collect and analyze patient data for risk adjustments, Shroff says. The traditional method has been to have people physically go from one hospital to another to collect data on portable computer drives and then sending that data for analysis by coders either in the United States or abroad.
That can cost up to $75 per patient chart retrieved and analyzed, he says. In addition, collecting patient data on portable drives and transmitting it to others creates many opportunities to violate the Health Insurance Portability and Accountability Act.
'Bipartisan Support' for Risk Adjustment
Risk adjustment is likely to survive intact no matter how the Trump administration changes or repeals the Affordable Care Act, Shroff says.
"Risk adjustment is a core CMS philosophy that has nothing to do with Obamacare," he says. "It was put into place under a Republican administration many years ago when Medicare Advantage first started, and the risk adjustment philosophy is something that, incredibly, has bipartisan support. That's going to continue forward regardless of what happens to the Affordable Care Act."
The value of the risk adjustment could increase, however, if changes to the healthcare law put a tighter grip on insurer revenue, so Shroff encourages health plans to revisit their processes for obtaining the best possible risk adjustment.
"Risk adjustment operations are crucial to a health plan's success, especially in the Medicare Advantage area, and if health plans pay close attention and take it on as an operational priority for the year, they could make tremendous strides and make their businesses better," he says.
Gregory A. Freeman is a contributing writer for HealthLeaders.