Helping Physicians Succeed in Risk-Adjusted Programs

Kyle Enger, MPH, PhD, Senior Analytics Consultant Healthcare Consulting

risk-adjusted programs

Private health plans as well as Medicare and Medicaid have used risk adjustment for years to evaluate the health outcomes and costs for treating their enrollees. Risk adjustment is an equalizer. It is designed to ensure that health care providers and health plans are compensated according to the risk of their patient populations. It also helps ensure that health plans do not try to enroll only the healthy patients and avoid the sicker patients. With risk adjustment, a health plan with sicker patients receives higher capitation or premium payments than a health plan with healthier patients.

The key to accurate risk adjustment is capturing complete demographic and diagnosis information for each patient. If information is missing, risk scores are underestimated, and money is ‘left on the table’. Therefore, billing and coding by physician practices plays a key role in risk adjustment; health plans are aware of this, and many of them use risk scores to compensate physicians in pay-for-performance programs.

Although there are many risk adjustment methodologies, in general they assess a person’s risk based on demographic information, such as age and gender, as well as diagnoses from health care claims. Regression analysis of these data yields a risk score for each enrollee. A score of 1.0 generally means that the person has an average expected cost, while lower scores mean lower than average expected cost, and higher scores mean higher than average expected cost.

So, how do you help physicians to succeed in risk-adjusted programs?

Health plans can assist physician practices by providing support in the form of written education, technology, and tools. However, each practice is different, and on-site consultants or coaches can help practices build processes and improve work flows to capture the necessary data for risk adjustment – in ways that work best for their practice. A small up-front investment in these resources can yield increased revenue for health plans as well as physician practices – a win-win.

Key Elements to Physician Success in Risk-Adjusted Programs

Physician success in risk-adjusted programs depends on accurate diagnosis coding and effective billing practices. This requires effective workflow, including:

  • Close charts promptly and regularly train billing and coding staff. Poorly trained or overworked staff are much more likely to close charts late or make coding mistakes. For a provider, an unsubmitted claim is two missed opportunities: first, the lost revenue for the procedure; second, the unreported diagnosis codes that could have accurately increased the patient’s risk score.
  • Code all diagnoses that affect medical decision-making during the encounter. Providers must ensure that the patient’s chart supports diagnoses on claims. Clear and thorough physician notes are important; if they describe Monitoring, Evaluating, Assessing and Treating (MEAT) each diagnosis, it facilitates complete and accurate coding, and it also protects the provider in the event of a chart audit.
  • Code specifically and accurately. Codes with ’unspecified’ in the description may not contribute to the patient’s risk score. Codes for a specific condition are more likely to increase to the risk score, particularly if they describe a complication or a more severe disease state.

If health plans empower and incentivize physicians to capture patient information properly by providing education and improving workflows within practices, risk scoring can be improved. This can yield increased revenue for health plans as well as physician practices.