Three questions with Sandeep Wadhwa, MD, MBA: Medicare Advantage in 2022—Part 2

January 18, 2022 / By Sandeep Wadhwa, MD, MBA, Kelli Christman

I sat down with 3M Health Information Systems Global Chief Medical Officer Sandeep Wadhwa, MD, MBA, to discuss clinical and financial risk management, and risk stratification with Medicare Advantage plans. Don’t miss the first part of this two-part blog conversation.

In the first part of this series on Medicare Advantage (MA), you talked about new benefits for MA enrollees for the new year and the importance of accurate and complete coding. Let’s get into clinical and financial risk management, and risk stratification.

First, let’s focus on managing clinical and financial risks. Health systems with downside risk arrangements have more responsibility for optimizing health and total costs of care within a budget. A major success factor to managing this health and financial risk for a population is understanding patterns of efficiency, inefficiency, expected and unwarranted variation in care and costs. There are opportunities to identify, learn and disseminate best practices from high performing service lines and support – and problem solve in areas that underperform. Discerning these patterns is highly complex and involves data ingestion, integration, analysis, visualization and reporting. No matter what, it begins with comprehensive data capture, which is where coding fits in.

I believe we’ll need to key in on the documenting and coding of healthy and unhealthy lifestyles and social needs, in addition to the traditional focus on capturing diagnoses, diagnostics and treatment. There is a growing recognition that healthy lifestyles and unmet social needs play a big role in poorer health outcomes. Medicare Advantage members often have access to innovative supplemental benefits that support healthy lifestyles and address social needs. Documenting and coding for these lifestyle and social risk factors not only informs the patient’s care plan and identifies members that are eligible for additional covered services, but it also allows for identifying patterns of population need that may be addressed through targeted, expanded or new programs. For example, understanding the individual and population burden of food insecurity, passive tobacco exposure or loneliness issues allow for novel community-based interventions to be considered that might be otherwise underappreciated.

That’s powerful data to measure and inform action. When it comes to reimbursement for capturing more accurate and holistic documentation, where do risk stratification and burden of illness figure in?

As coding professionals have a greater percentage of patients participating in MA plans, it is useful to become familiar with risk adjustment in the context of managed care. Risk adjustment for MA members is the method by which the Centers for Medicare & Medicaid Services (CMS) pays plans for the expected costs of their enrollees. The expected cost of enrollees is determined by the CMS hierarchical condition category (HCC) risk adjustment model.

Health plan payments are adjusted based on the CMS-HCC scores, which reflect the health status and demographic (age, gender, Medicaid and disability status) factors of the enrollees. The health status is assessed through diagnostic data captured in ICD-10 codes. This model of HCC risk adjustment is not only used for MA but also in many value-based care arrangements and a modified version for individual exchange plan members to ensure that payments and performance expectations reflect the complexity, health status and expected costs of the population.

Risk adjustment is a required element of health insurance models. It ensures that plans and groups that take accountability for a population that is sicker or more complex than average are adequately resourced to meet their health care needs. Likewise, if a population is less complex or has healthier health status, the sponsoring organization wants to ensure that it is not overpaying when expected resource use is lower than average.  

In traditional MA arrangements, the health plan supports activities to ensure complete and accurate capture of diagnostic information. With health systems and provider participation in MA, both parties are further aligned to ensure accurate coding of diagnostic information.

Can you describe some key features of CMS-HCCs?

ICD-10-CM codes map into 86 CMS-HCCs. Here are a few of the core elements of the CMS HCC system for coding professionals:

  • The CMS-HCC model recognizes diagnoses from 1) hospital inpatient (principal and secondary), 2) hospital outpatient, and 3) physician and clinically trained non-physician
  • Multiple condition categories can co-exist for a patient and, if they are unrelated, their incremental risk scores are additive
  • The model is hierarchical – within condition categories, there is hierarchical logic and the coded disease with the highest severity predominates the hierarchy and subsumes the related conditions
  • The model includes an additive factor for interaction between certain diseases and between a disease and a disability status
  • Diagnostic codes are examined in the model over a base year period; prior to base year diagnoses are not included in calculating CMS-HCC scores for the next year

I hope this gives our readers a better understanding on how MA may impact coding professionals.

Sandeep Wadhwa, MD, MBA, is Global Chief Medical Officer at 3M Health Information Systems.

Kelli Christman is senior marketing communications and strategic communications specialist at 3M Health Information Systems.