CMS compensates the Medicare Advantage (a.k.a Medicare Part C) Health Plan a premium and this premium is based on underlying health conditions of enrollees in Medicare Advantage Health Plan. The health conditions of enrollees is determined by risk adjustment factor which is calculated using the enrollees's age, sex, disability, medicaid, and diagnosis codes. Hierarchical Condition Category (HCC) is a risk adjustment model that Medicare uses to predict risk of future medical cost.
HCC risk adjustment and coding is a payment model that uses a patient’s health status and demographic information to calculate a risk score in order to establish a baseline for how much it will cost to provide care to that patient. A patient’s health conditions are identified through ICD-10 diagnosis codes submitted on claims which are mapped to HCC codes in the risk adjustment model.
The higher the risk score, the more at-risk and the health plan is compensated annually for providing care to that patient. However, CMS requires documentation of the condition at least once a year. Each January 1, the risk adjustment calendar restarts, and all your Medicare Advantage patients are considered completely healthy until diagnosis codes are reported on claims. CMS regularly conducts Risk Adjustment Data Validation (RADV) audits to ensure accurate HCC coding. If medical record documentation for the patient is incorrect or incomplete, your reimbursement for that patient may be adjusted downward.
These are the steps how the risk score is calculated:
Risk Adjustment is a process for quantifying a patient health condition into a risk score for Value-based Care Reimbursement. Successful capture of risk adjustment ensures proper reimbursements. Here are the common failures for Risk Adjustment capture:
To accurately report the severity of a member’s illness that affects care and treatment and to comply with the Centers for Medicare and Medicaid Services for a valid HCC, a provider must document in the medical record the clinical findings with supportive details:
Under Value-Based Care payment models, effective risk capture is not easy to achieve. It’s crucial for healthcare providers to develop Risk Adjustment Strategies so that they can position themselves for financial success in risk-sharing arrangements.
Analytics Engine is used to develop effective strategies to manage risks by modelling historical clinical records and performing analytical tasks on modeled datasets. It is used to analyze known and discovered data to mitigate future risks.