“RISK” in Risk Adjustment

In our previous article, we explained how Risk Adjustment is a “partnership” between the patient, the provider, the insurance plan (Plan), and the governmental entity. So, which partner in this process holds the “risk”?

Governmental Entity:

The governmental entity has risk because they establish the actual risk adjustment process, establish the rules for condition categories and hierarchies, determine eligible conditions and assign a “weight” for each, establish the rules for reporting and the process for reimbursement. Once that is done, however, this partner is still responsible to ensure that payments made are accurate based on the documentation in the medical record of the patient’s conditions.

For this last responsibility, the Risk Adjustment Data Validation (RADV) process was established and is used by Medicare, Medicaid, and HHS-based commercial payers. One of the primary purposes of RADV is to validate the accuracy of data submitted by the Plans for the purposes of risk adjustment calculations. Any diagnosis submitted for risk adjustment must be supported in the patient’s medical record. During RADV, the reported diagnoses are compared against the documentation within the patient’s medical record to ensure the diagnoses were documented by an eligible provider and were coded and reported correctly. Discrepancies noted during the RADV process can be grouped to determine an overall level of payment error. Based on the findings, the governmental entity may determine that the Plan received improper payments (e.g., diagnoses that were reported but not supported in the record). A request for repayment from the Plan can be initiated if improper payments were determined^[1]. Beginning with risk adjustment payment year 2018, the error rate from the reviewed sample may be extrapolated to the universe of diagnoses submitted by the Plan.

In summary, the governmental entity may incur risk when establishing the risk adjustment process with its rules, requirements, and conditions, as well as when monitoring the risk adjustment program for improper payments. If the government alleges improper payments were made, the plan would be able to appeal the determination. The government would then have the risk through the legal process to determine whether the overpayment request was valid.  

The Plan:

Insurance plans offer plans to individuals to cover the individual’s medical costs. Through the risk adjustment process, each enrolled member is assigned a risk score or risk adjustment factor (RAF). Members with expected higher healthcare needs based on their reported diagnoses will have a higher RAF score. This score is then used to determine additional payments to be made to the Plan for this member’s coverage.

As the plan’s enrolled members see physicians who in turn report on the disease state of the members,  the person’s RAF score will be determined.

Plan – Reporting:

The Plan is responsible to report only accurate diagnosis codes which are supported in the medical record documentation. There is risk in this process because the Plan is not actually diagnosing or confirming the diagnosis, but rather is just reporting a diagnosis made by a provider. If a provider documents an incorrect diagnosis in the record and the Plan then reports that diagnosis for risk adjustment, it is the Plan, not the provider, that would be responsible to return any monies paid to them by the government for those incorrect diagnoses. Therefore, many Plans perform provider education to ensure the providers understand the risk adjustment process.

Plan – Education:

The Plan has risk when establishing the educational programs to be used with the providers. The Plans may educate providers about the risk adjustment program regarding how the documentation and listed conditions can affect the diagnosis coding. But the education may not focus on whether any certain diagnosis is or is not eligible for reimbursement under risk adjustment. The Plan’s education should focus on thorough and accurate documentation for all conditions, not just those that will affect the RAF score. Likewise, education offered to coders should focus on correct coding and improved documentation by providers, rather than coding to increase financial reimbursement.

Plan – Review Process:

The Plan may choose to report only the diagnoses from claims data. However, the diagnoses listed on a claim for one encounter would only include those diagnoses that were formally addressed during that visit. For risk adjustment, any condition that was documented as monitored, evaluated, assessed, or treated (MEAT) during the visit may be reported. For example, a patient is seen for hypertension. During the visit, the provider documents they reviewed the patient’s medications which are documented as including the following: Januvia for diabetes, Imdur for CAD with angina, Lisinopril for hypertension and Spiriva for COPD. The claim may only show the diagnosis of hypertension because that is the condition formally addressed during the visit. However, for risk adjustment purposes, a review of that encounter note could also result in reporting diabetes, CAD with angina, and COPD since the provider documented medications were reviewed and the medication list shows the condition being treated. Therefore, many Plans will develop some type of chart review process to potentially capture additional diagnoses that were documented during the visit.

Some Plans utilize a retrospective chart review process. This process would involve a review of the documentation at some point after the visit, even after the claim for the encounter had been submitted and paid. In this process, coders would not be able to send a query to the provider if any questions arose.

Plans may also use a concurrent review approach process which involves a review of the documentation prior to claim submission. This process would allow coders to capture diagnosis codes not normally included on the claim and send queries to the provider to address any questions, documentation issues, etc.

However, when using this process, the query must be compliant with current guidance^[2] and should not be seen to encourage the provider to choose any particular diagnosis or RAF-eligible code. The provider should amend the record to accurately reflect their response to any query and queries should be created as to allow a provider to agree or disagree with the queried question. 

Plans may also choose to use a prospective review. For this review process, the Plan uses technology to look for conditions that were reported in a previous reporting period but not yet captured for the current reporting period. The technology also looks for “inferred” conditions based on medications prescribed, tests ordered, other services being rendered, and other potential clinical indicators, etc. The provider is sent a notice of the potential conditions and is asked to address their presence during the next visits. This method may not only identify diagnoses that were not previously reported and/or recognized, but also encourages providers to schedule appointments for “high-risk” patients. Again, the focus of a prospective review should be for complete and thorough documentation in the patient’s medical record and not merely focused on reimbursement. The prospective method also allows for patient outreach to occur sooner, rather than later, and can positively impact behavior change for the patients as well as the providers.

Plan – Eligible Providers and Settings:

The Plan must ensure reported diagnoses are collected from a face-to-face encounter with an eligible provider type in an eligible risk adjustment setting. The Plan must be aware of provider types and settings which are not to be used for reporting in risk adjustment and should have procedures in place to ensure only eligible diagnoses are captured and reported. During the public health emergency, telehealth encounters were permitted to be used for risk adjustment diagnosis capture. However, there were rules related to what was required for the visit to be eligible as “telehealth” with audio and video and not just via telephone. If the Plan was not monitoring the provider’s documentation carefully, it is possible that diagnoses from an ineligible encounter were reported.

Plan – Dependent on the Provider’s Documentation

Based on diagnostic coding guidelines, the provider’s documentation that a condition exists is adequate for a coder to allow reporting of the condition. The coder does not need to ensure clinical criteria for the condition are documented and have been met. The Plan, however, is reporting the diagnosis to the governmental entity. If the governmental entity determines the documentation was not sufficient to support a diagnosis in a reporting year, it is the Plan which must return the payment even though the diagnoses were reported based on the provider’s documentation.

ICD-10-CM Official Guidelines for Coding and Reporting, effective for the period covered by the reviewed documentation, Section I.A.19 “Code Assignment and Clinical Criteria” (coding rule 19), stated “The assignment of a diagnosis code is based on the provider’s diagnostic statement that the condition exists. The provider’s statement that the patient has a particular condition is sufficient. Code assignment is not based on clinical criteria used by the provider to establish the diagnosis.”

Even if the Plan questions the accuracy of the diagnosis, they are not permitted to instruct physician’s on how to practice medicine, make and assign diagnoses, etc.

Based on the provider’s documentation, the Plan reports a diagnosis code of a condition to the governmental entity. However, during a later audit (RADV or other types of audits), it is determined that the documentation does not fully support the diagnosis. For example, even though the provider stated a given condition existed, it is possible that an audit would determine that the documentation did not support criteria to be eligible for risk adjustment. In this case, the Plan would be held responsible to return payment to the governmental entity even though they reported a condition that was documented in the record.

Plans are not to take on the role of provider or diagnostician. The diagnosis and plan of care, etc., is to be driven by the patient’s provider.  Plans are not permitted to instruct the provider on the practice of medicine or on specifically how to document. For example, they are not permitted to instruct providers to link two co-existing conditions that may or may not be linked to each other. The Plans must follow coding guidelines which instructs, in some circumstances, that two conditions are to be coded as linked even if the provider does not state the linkage. However, other than those specific circumstances, the provider would have to clearly state the linkage between the conditions. If the linkage is not stated by the provider, the Plans would have to query the provider as to the linkage and may not just instruct the provider to link them. The Plan is also not permitted to change a diagnosis reported by a provider. So, what should they do if the provider is diagnosing ankylosing spondylitis when the documentation does not support that diagnosis?

The Provider:

Some people believe the provider’s responsibility and risk ends when they sign-off on the documentation they created for the patient encounter. However, there are instances when the provider may be held responsible for the diagnosis.

Some electronic medical record systems (EMRs) are set up to offer higher level of severity diagnoses to the provider when researching for the correct code. For example, if the provider is researching for low back pain, the EMR first lists diagnoses that are risk adjustment-eligible such as sacroiliitis or specified spondylopathy rather than lumbago with sciatica or spinal stenosis which do not risk adjust. Some providers have their reimbursement linked by the Plans to the patient’s RAF, whereby the provider’s reimbursement is dependent on their documentation of risk-eligible diagnoses.

As stated before, telehealth encounters were permitted to be used for risk adjustment diagnosis capture. However, providers often failed to document that the requirements for telehealth were met but reported the visit using the codes representing it as telehealth.

You may be aware of “upcoding” regarding billing for evaluation and management code levels. But the same thing can happen under risk adjustment and diagnosis coding. The same can exist in the documentation of diagnoses by providers. The example given above under the Plan section, refers to a provider whose documentation clearly identifies a risk-eligible diagnosis as present and existing. However, clinical review of the record would reveal that a less-severe condition existed. For example, the provider documented regional enteritis disease which codes to codes under the K50 category which are risk adjustment eligible codes. However, review of the documentation describes a short-lived gastrointestinal condition and may even document a known viral cause. If the provider had stated the condition as gastroenteritis of infectious or unspecified origin, the correct code would be A08.4 which does not affect the patient’s RAF score.

In some of these circumstances, the provider may be held responsible for the errors that resulted from reporting of what they had documented.

Example:

CMS recognized a statistical outlier for a Medicare Advantage Plan for the diagnoses of ankylosing spondylitis and Crohn’s Disease. The suspicion was that the Plan was either upcoding the diagnoses for reporting or are instructing/encouraging the providers to up-code to risk adjustment-eligible conditions. CMS requested review of these issues by a nurse-coder.

Review of the Plan’s data revealed many of these outlier diagnoses were reported by one family practitioner. Review of this documentation showed patients presented with low back pain. No studies had been performed to rule out differential diagnoses such as mechanical low back pain, rheumatoid arthritis, psoriatic arthritis, spinal stenosis, sacroiliitis, etc., some of which are risk adjustment-eligible and others not. From the first complaint of low back pain, the provider stated the diagnosis was ankylosing spondylitis.

This same physician’s data showed documentation supported patients presenting with diarrhea, most patients with a one-time-only event. Some patients were also documented as having a viral illness at the time. There was no evidence of ongoing bowel issues or treatment for any type of chronic inflammatory bowel disease for these patients. However, the provider assigned a diagnosis of Crohn’s Disease to each individual occurrence.

In this example, the governmental entity researched how the Plan educated their providers to determine if the Plan encouraged providers to document risk-eligible diagnoses. Review of the Plan’s educational materials for providers showed the focus of the education was on thorough, complete documentation and correct coding procedures and guidelines for assignment of the highest level of specificity of the condition and assignment of the most accurate diagnosis code without any reference to reimbursement.

Documentation showed the diagnosis was assigned by the provider and had not been “upcoded” by the Plan. Based on the coding rule 19, the Plan would have been correct in reporting the diagnoses to CMS for risk adjustment purposes. However, based on the concerns of inadequate medical documentation to support that the documented condition existed, the recommendation could be to refer the provider (not the Plan) to the Office of the Inspector General (OIG) for further review and refer the provider to the appropriate state’s medical licensing board for evaluation of appropriate medical diagnosis, treatment, and proper documentation.

The Patient

As stated in my previous article, “Risk Adjustment Partnership”, even the patient is considered a partner in the risk adjustment model of care. The patient would hopefully be invested in their care, knowledgeable of all their conditions, seek help early when ill and for also attend routine follow-up and preventative care appointments. The patient should be responsible for following the advice given by practitioners and being pro-active and an advocate for their care. When the patient is involved in their care, they are more likely to follow the advice given by their practitioners and be an advocate for themselves.

Even though the patient may not have a direct financial impact “risk” under risk adjustment, their use of the medical system and access to medical care can directly impact the costs of care. Patients who are pro-active and who participate in preventive care measures may help decrease the overall burden on the health system. Patients who access care management services that are often made available to “high-risk” individuals, can also positively impact their overall health and healthcare costs.

If the patient’s Plan found to have a high outlier rate of reporting errors, the government may choose to no longer contract with that Plan which would limit the patient’s overall choices. If an actual provider was referred to their state’s licensing board for improper diagnosis, treatment, and documentation, that provider could lose their license to practice medicine and the patient would lose their practitioner. If the costs of healthcare continue to rise, the governmental entities may change the reimbursement process and/or increase the costs to be passed-on to the patients. The Plans may pass some of the increased costs and losses on to the patients in the form of higher premiums, higher copays and deductibles as well as limitations in coverage.

Summary

In summary, the “risk” may belong to any and/or all the partners in the risk adjustment process. Each partner must be diligent and attentive to their roles and responsibilities including developing the appropriate level of quality assurance and compliance program oversight.

Lorraine Aniello
Clinical Coding Audit Director
SunHawk Consulting, LLC
lorraine.aniello@sunhawkconsulting.com

Lorraine is a Registered Nurse and holds certification as a Certified Professional Coder (CPC), Certified Risk Adjustment Coder (CRC) from the American Academy of Professional Coders (AAPC), and Advanced HCC Auditor (AHCCA) from Rise Health. She is also certified as a HealthCare Anti-Fraud Associate (HCAFA).

Lorraine has been a coding trainer and reviewer for one of the largest U.S. healthcare organizations. Within regulatory organizations, she has worked with state Medicaid policy and program integrity, MFCUs, RACs, MEDIC, and was a corporate clinical trainer for a national vendor who assisted Medicare and Medicaid Advantage companies with risk adjustment data collection, coding and reporting. She has provided testimony and expert analysis for both government prosecutors, litigation counsel, and defense counsel.

James Rose
Managing Director
SunHawk Consulting, LLC
James.Rose@SunHawkConsulting.com

James Rose is Managing Director of SunHawk Consulting LLC. James is a CPA and also holds certifications in Internal Auditing (CIA), Risk Management Assurance (CRMA), and Information Systems Auditing (CISA, CISSP). James is an experienced healthcare operations, governance, risk, and compliance executive focused on the healthcare and governmental industries. Most recently he served as Chief Financial Officer of Aperture Credentialing LLC, where he was also accountable for many of the traditional Chief Operating Officer duties in addition to CFO / Controller responsibilities. He currently serves as an expert advisor to the World Health Organization’s Staff Health Insurance Global Oversight Committee (providing his expertise on health and wellness programs as well as medical insurance cost management and financial planning). James is also Chair of the Jefferson County Public Schools Audit and Risk Advisory Committee.

Rachael Mills
Managing Consultant
SunHawk Consulting, LLC
rachael.mills@sunhawkconsulting.com

Rachael Mills is a Managing Consultant with SunHawk Consulting, LLC and is experienced in medical claims analytics, statistical analysis, compliance assessments, GRC (governance, risk and compliance) platform configuration and overall project and program management. She is skilled in compliance program communication development including digital design, brand management, training development, and marketing communications. At a national healthcare credentialing organization Ms. Mills assisted with the design and implementation of both internal and external forms of marketing communications and collateral. At SunHawk, she has supported numerous compliance reviews, HIPAA assessments, statistical engagements, investigations, and GRC tool implementations. Ms. Mills has assisted with annual compliance risk assessments conducted for clients as part of their Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG), as well as supported SunHawk during Independent Review Organization (IRO) engagements.

[1] Health plans have argued that accuracy of clinical documentation should not be an absolute factor in plan reimbursement but adjusted to the clinical documentation error rate found in FFS government payments given that the reimbursement for Medicare Advantage is supposed to have an equivalency to FFS reimbursement. While this argument may hold for the aggregate payor reimbursement, it is hard to argue that provider practices and clinical documentation efforts – provider or payor – should not be held to a high standard of accurate clinical documentation of diagnosis and coding.

[2] “Guidelines for Achieving a Compliant Query Practice – 2022 Update.” ACDIS, 14 Dec. 2022, acdis.org/resources/guidelines-achieving-compliant-query-practice%E2%80%942022-update