Risk adjustment: The pitfalls of inaccurate ICD-10 coding

Jan. 15, 2024 / By Karla VonEschen, MS, CPC, CPMA

If you work with risk adjustment coding, chances are you’ve seen some recent news from the Office of Inspector General (OIG) announcing findings for audits performed. OIG audits aren’t new, but scrutiny of risk adjustment coding has increased in the last year. By late 2023, the OIG had already audited for several high-profile payers. The following is a summary of the OIG findings:   

• A health insurance company paid a $37 million settlement for submitting false and invalid diagnosis codes for Medicare payment. 
• Another insurance company received approximately 25.5 million in Medicare Advantage overpayments in 2015 and 2016. 
• A third health insurance company received an estimated $6.2 million in overpayments between 2016 and 2017. 
• One health system has already reimbursed CMS 1.5 billion in risk adjustment payments, with $380 million still owed.  
• A health plan was overpaid an estimated $6.5 million between 2016 and 2017. 
• Another received an estimated $11.3 million in overpayments between 2016 and 2017. 
• Yet another health plan received an estimated $2.2 million in overpayments between 2017 and 2018. 

The common factor with the above findings is a lack of supporting documentation for the risk adjustment diagnosis codes billed and compliance policies that lacked guidelines to detect, prevent or correct non-compliance with Centers for Medicare and Medicaid Services CMS’ risk adjustment requirements. In addition, the Risk Adjustment Data Validation (RADV) results memo published by CMS in June 2023 highlighted conditions that had been identified as miscoded during review of the 2021 benefit year and in previous audit years. 

Why do we continue to see compliance issues? 

There may be several reasons why we continue to see compliance issues. Risk adjustment coding is a labor intensive and complex process requiring coders to review large amounts of documentation and data, which can lead to errors. It is also a multistep process that involves review, queries and follow up. Differences in judgment when reviewing the same information are common during chart reviews. As medical coders know, not everything is black and white, which may lead to omissions or discrepancies in the risk adjustment coding process. Coder, CDI and medical staff turnover can impact documentation. Organizations hire new coders and medical staff who are not familiar with risk adjustment yet would be responsible for documentation and coding to capture this important information. Also, there may be inconsistent oversight or a lack of internal compliance measures to monitor risk adjustment programs.  

How to mitigate risk 

Having robust audit and compliance policies is critical for risk adjustment programs. The OIG clearly identifies whether organizations have existing compliance policies and procedures and makes recommendations to update those policies to avoid future issues. Being a new year, this is a great time to review your current policies and identify gaps that put your organization at risk. Here are additional steps to consider: 

• Stay current with OIG audit outcomes. 
• Schedule ongoing education for coders, CDI and medical staff to ensure they understand what is needed for appropriate coding, current audit findings and corrective action plans. 
• Increase the frequency of risk adjustment audits. 
• Use data mining to identify high volume risk adjustment codes for auditing. 
• Incorporate technology to support the coding process, allowing medical coders more time to audit charts and follow up with clinical staff as necessary. 
• Hire additional staff to work specifically with risk adjustment coding or to take on other roles, thus freeing up your risk adjustment coders to perform additional auditing.  

Risk adjustment oversight is a requirement. By prioritizing this process, you can help avoid some of the pitfalls of risk adjustment coding.

Karla VonEschen is a coding analyst at 3M Health Information Systems.