Amber Malone-Wright – Why Risk Adjustment Matters in Clinical Documentation and Coding

This episode is first in a two-part series about Clinical Documentation and Coding. In part one, we talk about the importance of Risk Adjustment with Amber Malone-Wright, Director of Clinical Documentation Integrity at CHESS Health Solutions.

What is risk adjustment and why is it so important?

So risk adjustment is really a way to describe funding for resources and care to manage patients chronic or serious illnesses. It really helps to identify the risk that the patient is going to incur when medical costs that are above or below average for the year. It’s really a financial forecasting that the health plans use to predict the future medical needs for the patients. So for example, a health plan receives payment from the government to help pay for the services that that patient is going to seek, whether that’s an outpatient visit for chronic condition or an inpatient visit for a serious or acute illness, such as sepsis or a serious infection. And the funding to the health plan that they receive from the government pays those services at the hospital and office visit or primary care level. Risk adjustment matters because it’s a way for the providers to report how sick their patients are and to ensure that there are resources available to those patients are there at their fingertips. So when a provider is able to manage their patients chronic conditions and prevent the hospitalizations the health plan actually ends up in a surplus and is able to share those funds with the provider, who is controlling the costs, and those patient chronic conditions. Health plans generally are going to use the funding to offer patients better premiums and other resources as well, such as Meals on Wheels or transportation and ways to lower prescription costs and many other different programs.

And how does risk adjustment work?

So in risk adjustment, value is assigned to each diagnosis code that falls into this payment model that’s used by the government for the health plans. The ICD-10 codes are grouped in what we call HCC’s or hierarchical condition categories. And these HCC categories are related to both clinical and financial resources available for those patients. Each diagnosis code that’s mapped to one of these categories provides a risk adjustment factor score to identify the acuity or the sickness of that patient. Those risk scores are then calculated and converted into our financial resource for the health plan to cover those services for those patients.

How are providers impacted by risk adjustment?

So many providers are not directly impacted by risk adjustment because it’s a way for the health plan to receive funding. A majority of providers are still part of what we call the fee-for-service reimbursement model, where they’re reimbursed for a service they provide to the patient using a procedure code or an office visit code, for example. Most hospitals are reimbursed based on what we know is the MSDRG system when a patient is admitted to the hospital. It’s a similar reimbursement methodology to risk adjustment in that the hospitals are paid a lump sum based on the diagnosis to cover the cost of care provided for those chronic or acute conditions that are being treated in the inpatient setting. Value-based care is really shifting the providers to be more responsible with managing the patients more effectively and coding more accurately. This means that providers need to be aware of what specialists are they are referring to how, often the patients are seeing their specialists, if they’re going to the ED for unnecessary illnesses, such as urinary tract infections, and how many times they’ve been admitted to the hospital. All of those are you know primary care gatekeeper responsibilities. This also means that providers need to document and code all of the chronic conditions to the highest level of specificity and this is to help ensure that those resources and funding is available to the patients when they utilize the health care system. So when providers manage utilization and they code to the highest level of specificity, in value based care, there’s often incentives and bonuses to reimburse those providers for the additional work that they’re doing to manage those patients. Health plans are held at risk for diagnosis that are submitted via claims and if those diagnosis codes that are submitted or not supported in the medical record documentation, then the health plan is ultimately penalized financially. So not only that but health plans run the risk of being underfunded if all of the chronic conditions are underreported. So providers documentation and coding directly impacts the funding for the health plan. Improved documentation and coding leads to better patient care. This is the primary way of communicating the patient record for specialty care and also to the health plans and CMS. So accurate documentation also improves quality reporting and efficiencies when responding to regulatory requirements such as a HEDIS or MIPS or quality reviews and risk adjustment data validations known as RADV audits that are conducted annually by CMS.

Would you tell me about the impact that unspecified diagnosis coding may have on both providers and patients?

So that’s a great question. If medical documentation lacks the accuracy and specificity needed to assign the most appropriate diagnosis codes, providers face the possibility of reduced payment if they’re part of a performance-based payment model and they won’t be compliant with CMS standards. There’s also a missed opportunities for patients to be identified for care management programs or even disease interventions programs. So as healthcare continues to change, high quality documentation continues to be a cornerstone of accurately reflecting the work of the provider and the condition for each patient. Risk adjustment takes a close look at how ICD documentation and coding can also contribute to the complexity of care for the visit, the medical decision making, and the time spent with that patient. Good documentation around coding will paint the true clinical picture of the patient and is reflective of the thought process of the provider. Many providers have oftentimes heard if it wasn’t written it wasn’t done. This helps also to control the cost of care and stabilize patient premium increases.

What recommendations do you have to help providers in value-based care contracts?

Providers should have their documentation audited to ensure that the patient’s clinical conditions are being fully described in clinical documentation. It’s important to work with coders or clinical documentation improvement specialists and consider their feedback around their documentation. It’s also important to monitor and decrease their use of unspecified diagnosis codes, as unspecified diagnosis codes did not fully describe the patient’s clinical conditions. Oftentimes, electronic medical records or practice management systems can have errors in mapping of ICD 10 codes, so it’s important to make sure that the diagnostic description matches the ICD 10 code. Education and training should be conducted based on the results of the audit. Providers did not go to school to learn medical coding and it is like learning a new language. There’s a lot of rules and guidelines and regulations that are not available in an EMR for provider education. So it’s important really to just conduct an annual audit to ensure documentation and coding accuracies are sustained and when errors are identified to reeducate and monitor those audits and programs in place.

What can a provider do right now to begin to move the needle in risk adjustment?

So one major component that providers can do is really understand who their population is by managing their appointments. So bringing all of their patients in for routine Annual Wellness Visits, chronic care management disease programs, or identifying the transitional care management opportunities for patients who have been at the hospital and identifying and addressing all of their chronic conditions and managing them appropriately so that we can decrease utilization that’s unnecessary and make sure that those patients chronic conditions are stable and well managed.