What Risk Adjustment Looks Like Today

What Risk Adjustment Looks Like Today

The Start Of Risk Adjustment In 1997, the Balanced Budget Act (BBA), was the first year that Risk Adjustment methodology for Medicare Advantage (formerly Medicare + Choice) was required.

How Risk Adjustment Works To understand the full scope of Hierarchical Condition Category Coding (HCCs), and become an expert HCC Coder, you must first understand the nuts and bolts of Risk adjustment Risk Adjustment (RA), is a hybrid of what you may know as traditional capitation.

How Risk Adjustment Works A traditional capitation system for a managed care organization pays a provider or group a fixed dollar amount on a per member per month (PMPM), basis, which includes all services that a plan member may require during a calendar year

How Risk Adjustment Works When CMS first implemented its Risk Adjustment Model, it was only hospital inpatient diagnoses that were gathered and reviewed to determine actual payments to an MA Plan.

How Risk Adjustment Works In 2000, along came the Benefits Improvement and Protection Act (BIPA), and Congress decided to mandate ambulatory data to be additionally collected with the inpatient diagnosis codes.

How Risk Adjustment Works Another significant change to the landscape is that MA Plans were now going to be measured on quality within the STAR Ratings program, which meant the bonus structure was changing and over the next few years, only 4 and 5 STAR Plans would receive bonuses as of 2014.

How Risk Adjustment Works Then there was a gradual integration and it was not fully implemented until 2007 with completion of 100% risk adjusted payments for the majority of MA organizations. There were a few demonstration plans, which were not fully phased in until 2008.

How Risk Adjustment Works The Affordable Care Act prompted yet another shift in CMS reimbursement policy to MA Plans by reducing federal payments to MA Plans over time, which resulted in closing the gap on cost by bringing them closer to the median costs of care under traditional Medicare

The Numbers in Risk Adjustment Medicare Advantage Start to Current Enrollment Numbers As of 2014, there is an estimated 54 million people on Medicare in the U.S., of those 54 million, about 70% are enrolled in traditional Medicare and the remaining 30% are enrolled with a Medicare Advantage Plan.

The Numbers in Risk Adjustment Since 2004, the number of beneficiaries enrolled in private plans has almost tripled from 5.3 million to 15.7 million in 2014.

Risk Adjustment And The ACA It is important to understand that the CMS Risk Adjustment program is a huge player in the Affordable Care Act s (ACA s) ever evolving financial infrastructure and that it plays a critical role in preserving the private insurance market.

Risk Adjustment And The ACA The Risk Adjustment program is the anchoring process for stabilization under ACA, which is assisting in the overall methodology of factoring the true disease burden of an MA Plans members.

2014 And Risk Adjustment 2014 not only was a new year, but it meant that ACA was fully in effect and with that meant Plan denials for pre-existing conditions and underwriting would now become extinct.

2014 And Risk Adjustment There is a greater risk for a higher mix of sick versus healthy individuals who are now going to be covered by an MA Plan.

2014 And Risk Adjustment This means that MA Plans are going to have to manage their members care by coordinating with Plan Providers better than they have in previous years, with better MLR management and Member satisfaction for starters

CMS Risk Adjustment The CMS Risk Adjustment Program is Prospective in nature, which means that ICD-9-CM and ICD-10-CM diagnosis codes from the prior year and demographic information are measured and utilized in order to predict future costs to the Plan by sick members and adjust payments accordingly.

CMS Risk Adjustment Risk Adjustment (RA), is the methodology utilized by The Centers for Medicare (CMS), to adjust bids and payments to Medicare Advantage Plans (MA) Based on a Plans member demographics, which include age, sex and health status of those members. It is a prospective model which uses a base period to predict cost for a future period.

CMS Risk Adjustment RA uses a classification system that takes a member s illness and groups them into what are known as Hierarchical Condition Categories (HCCs), which in turn have a relational value to over 3000 ICD 9 CM codes (3166 for 2014) and even more for ICD 10 CM.

CMS Risk Adjustment An HCC code is similar to facility based Diagnostic Related Groups (DRGs), which are used to determine hospital reimbursement

CMS Risk Adjustment HCC codes payment methodology is based on diagnosis codes and DRG codes are based on CPT 4/Procedural codes

MA Plans Part C (Medicare Advantage Medical) Is different from traditional managed care, whereas Plans are reimbursed higher for sicker members, versus being reimbursed for higher for healthy members in the latter.

MA Plans Part C (Medicare Advantage Medical) A provider may treat a member whose chronic illnesses fall under several HCCs and for those HCCs that fall under a different category within the 79 HCC groups currently

CMS/HCC Diagnostic Classifications The CMS-HCC V12 model includes the 70 HCCs (out of a total of 189 HCCs) that best predict Part A and Part B medical expenditures. The CMS-HCC V21 model includes 87 HCCs. Example: 250.00 DMII /s cmp nt st uncntr/e11.9 DMII /s complications CMS-HCC v12: 19 - Diabetes without Complication CMS-HCC v21: 19 - Diabetes without Complication CMS-HCC v22: 19 - Diabetes without Complication CMS-HCC ESRD: 19 - Diabetes without Complication CMS-HCC Rx: 15 - Diabetes without Complication HHS-HCC (ACA): 21 - Diabetes without Complication

CMS/HCC Diagnostic Classifications 496 - Chronic airway obstruction, not elsewhere classified/j44.9 - Chronic obstructive pulmonary disease, unspecified CMS-HCC v12: 108 - Chronic Obstructive Pulmonary Disease CMS-HCC v21: 111 - Chronic Obstructive Pulmonary Disease CMS-HCC v22: 111 - Chronic Obstructive Pulmonary Disease CMS-HCC ESRD: 111 - Chronic Obstructive Pulmonary Disease CMS-HCC Rx: 104 - Chronic Obstructive Pulmonary Disease and Asthma HHS-HCC (ACA): 160 - Chronic Obstructive Pulmonary Disease, Including Bronchiectasis

CMS/HCC Diagnostic Classifications 412 - Old myocardial infarction/i25.2 - Old myocardial infarction CMS-HCC v12: 83 - Angina Pectoris/Old Myocardial Infarction CMS-HCC Rx: 89 - Coronary Artery Disease Does not Risk Adjust for V21 or V22. No longer carries an HCC.

CMS/HCC Diagnostic Classifications V49.75 - Amputation status; below knee/z89.519 - Acquired absence of unspecified leg below knee CMS-HCC v12: 177 - Amputation Status, Lower Limb/Amputation Complications CMS-HCC v21: 189 - Amputation Status, Lower Limb/Amputation Complications CMS-HCC v22: 189 - Amputation Status, Lower Limb/Amputation Complications CMS-HCC ESRD: 189 - Amputation Status, Lower Limb/Amputation Complications HHS-HCC (ACA): 254 - Amputation Status, Lower Limb/Amputation Complications

CMS/HCC Diagnostic Classifications 401.9 - Essential hypertension; unspecified/i10 - Essential (primary) hypertension CMS-HCC Rx: 88 - Hypertension 272.4 - Other and unspecified hyperlipidemia/e78.4 - Other hyperlipidemia CMS-HCC Rx: 23 - Disorders of Lipoid Metabolism

HHS-RA Risk Adjustment (RA), is now utilized by the Department of Health and Human Services (HHS) as of 2014. It is the model for Individual and Small Group Markets The Affordable Care Act (ACA)

HHS/HCC Key Elements Key element to establish the RA Model. Data Methods Results Evaluation of the RA model It is a concurrent model Dx from a time period to predict cost of same time period.

HHS/HCC Key Elements Uses Individual s Demographics Diagnosis This allows for a relative measure in how costly an individual is anticipated to be.

Prediction Year Using the CMS-HCC as model and adapting it for HHS- HCC CMS-HCC uses base year diagnosis and demographics to predict the next year s spending HHS-HCC uses current year diagnosis and demographics to predict the current year s spending

Population Using the CMS-HCC as the model and adapting it for HHS-HCC has it s challenges <65 or disabled Medicare population Unique conditions with low sample sizes thus used commercial population Pregnancy Neonatal complication

Type of Spending Rx spending CMS-HCCs predict non-drug medical spending HHS-HCCs predict drug and medical spending

HHS Risk Adjustment Model 264 HHS-HCCs in the full diagnostic classification 127 HHS-HCCs in the subset 100 HHS-HCCs in the grouping clusters

HHS/HCC Risk Transfer Formula Intendent is to offset the effects of risk selection on plan costs while preserving premium differences due to factors such as actuarial value differences. HHS will use this formula when operating RA on behalf of a state.

HHS/HCC Risk Transfer Formula Uses all individual risk scores in an RA Plan Makes adjustments Calculates the funds transferred between plans

HHS/HCC Models Developed 15 Different Models Based on Age Adult Child Infant Cost Sharing Metal Models Platinum Gold Silver Bronze Catastrophic Plans

The Why of Risk Adjustment RA is the wave of the future for reimbursement. It predicts and promotes healthy providers and payors. The bottom line is the care of the patient.

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