The Complexities of Risk Adjustment Coding Three Key Challenges When Considering How to Manage Risk Adjustment

Health plans are operating in an increasingly complex risk-adjusted world, and many lack the tools, specialized staff, and ongoing training programs to manage risk properly. The consequences of errors and inconsistencies in risk-adjusted coding can be financially impactful, with health plans either paying hefty fines for overstating member risk or being underpaid for understating member risk. How can you be sure your organization is adequately managing risk adjustment? Or is it time to consider aligning with an external organization which is adept in each of the dependencies critical to managing risk adjustment?

Under the Affordable Care Act (ACA), most commercial plans today are paid based on members’ risk scores. These scores are derived from hierarchical condition categories (HCCs), which are based on encounter data collected from providers. Medicare Advantage plans have been receiving risk-adjusted payments since 2007; however, commercial health plans have only been receiving these types of payments since 2014.

Many plans outsource key tasks associated with HCC risk adjustment and leverage a vendor’s technologies, streamlined processes, and coding staff to accurately document their true risk burden – all with minimal internal disruption.

On the other hand, plans that approach the demands of risk adjustment internally may find the process to be both time-consuming and costly. Prioritizing the resources, people, and technology needed to obtain and review charts from providers and ensure member risk is accurately documented can place a strain on even the most efficient health plans. By electing to handle HCC coding in-house, plans regularly face three major challenges: consistency, commitment, and agility. Meeting these challenges in the midst of rapidly changing government regulation is more complicated than many plans had bargained for – leaving some of them wondering if they are being paid accurately for services provided.

Three Key Challenges

Consistency: Many coders – the people who review provider documents and ensure that risk is correctly reported – work at home, using their own hardware and software. This can lead to inconsistencies in the way work is performed and the way risk is evaluated. Providing your coders with powerful, dual-monitor workstations and efficient communication and chart annotation software tools enables them to view large quantities of information rapidly and can help reduce coding inconsistency and inefficiency.

Ongoing training regarding coding requirements, which tend to change frequently, also reduces inconsistencies and errors. Ensuring that all employees receive the same training and have access to the most current policies and procedures is essential. This may seem obvious, but coding policy and any changes should be communicated with immediacy. To be effective, this will require your HCC coding leadership to implement a comprehensive internal communications plan as well as create an infrastructure that can accommodate focused training, as needed.

Commitment: Your commitment to providing your coding team with everything necessary to do the job correctly is critical. This has become a particularly important issue since the enactment of the ACA. For years, coders focused only on Medicare Advantage members. Experienced coders were highly adept at dealing with this population. Newly introduced ACA plans cover a very different population, whose needs include pediatrics, obstetrics, and gynecology. Training your coders in these new areas can take several weeks which inevitably will interfere with ongoing production. Any disruption aside, your commitment to ongoing coder training will help ensure appropriate coding in the ACA environment.

We’ve learned that successful coding teams have commitment not only from the executive team, but also from the coders themselves. Regularly testing coders while they are undergoing training helps ensure that they have mastered the applicable rules and guidelines before they move to production. It also helps ensure they are committed to the work and to your health plan’s success. A ramp-up phase, during which 100 percent of a new coder’s work is audited, is also beneficial.

Agility: Coding requirements are in constant flux, which makes agility key. ACA plans are currently using both ICD-9 and ICD-10 codes in documenting patient care while, at least for the time being, Medicare Advantage plans are using only ICD-9. It takes training for coders to master both sets of diagnostic codes, as there are significant differences between them.

Access to AHA Coding Clinic®, which is often considered the bible of coding, is also critical. Coding Clinic keeps subscribers apprised of changes in both ICD-9 and ICD-10. Yet we’ve found that some payers and vendors don’t have access to Coding Clinic which increases the likelihood of errors in this quickly evolving area of work.

Repercussions for the Bottom Line

Organizations that choose to tackle the risk adjustment process internally but fail to respond effectively to these challenges run the risk of under-reporting risk and, as a result, being underpaid; conversely, over-coding can result in being penalized by the federal government. Both outcomes will have serious repercussions for the business and the bottom line.

Given the costs and difficulties of reliable, consistent coding, many payers outsource this important job to external organizations that specialize in HCC risk adjustment. Selecting an experienced vendor that actively meets and exceeds the three key challenges we’ve outlined – consistency, commitment, and agility – will help ensure both efficiency and accuracy in HCC risk-adjusted coding.

DST Health Solutions provides a full suite of HCC risk-adjustment services, including coding for both Medicare Advantage and ACA plans. With integrated risk stratification and chart retrieval services, along with sophisticated coding technology and reporting capabilities, our staff has the experience, training, and tools to help your organization receive proper reimbursement for the risk it takes in covering members.

For more insight on risk adjustment, download our white paper “Six Best Practices in Risk Adjustment for ACA Health Plans” or call us at 800.272.4799.

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