Value-based payment means risk adjustment for effective revenue cycle management

May 3, 2017 / By Kristine Daynes

Value-based payment models are attracting attention for risk adjustment methodologies, especially HCC risk adjustment, which is used to calculate cost benchmarks for Medicare Advantage and other CMS payment models including MSSP ACOs (Tracks 2 and 3), Merit-Based Incentive Payment System (MIPS), and Advanced Alternative Payment Models, such as Comprehensive Patient Care Plus (CPC+).

Healthcare providers want to make sure HCC-based reimbursement accurately reflects their true patient population, according to Fabian Stone, the associate vice president of revenue cycle and health information for Duke Health’s patient revenue management organization. Mr. Stone spoke on “Duke Health’s Journey to Value-Based Care: Strategic Planning for HCC Optimization” at the 3M Client Experience Summit in Salt Lake City, April 25-27.

“MACRA preparation drove Duke Health to assess its current risk-adjustment programs,” said Mr. Stone. “The current risk scores from our Medicare Advantage and MSSP ACO programs didn’t completely reflect patient acuity. Incomplete HCC coding underrepresents the complexity of assigned populations.” As an academic medical center, Duke attracts complex and higher-risk patients. Making sure claims data conveys the complexity of their patients is critical to the organization’s success in new value-based payment (VBP) models.

Mr. Stone explained that in order to be eligible to incentive payments and to avoid penalties under some VBP contracts, Duke Health must meet risk-adjusted cost benchmarks set by Medicare and some commercial payers. The cost benchmarks are set according to the complexity of their patient populations using HCCs or other health risk methodologies. These methodologies use information in payer claims to identify the factors that affect patient risk and apply algorithms to predict a patient’s burden of care. If the claims data is complete, accurate, and up-to-date, the risk-adjustment methodology produces a more accurate projection of a popualtion’s health—as measured by predicted costs. Payers can design payment models that provide higher payments for sicker beneficiaries and lower payments for healthier members.

Although Duke Health’s payer mix uses several different risk-adjustment methodologies, Mr. Stone describes his organization’s risk adjustment optimization as “payer agnostic”: It produces more accurate document and coding for any population to which it is applied, whether they are Medicare, Medicaid, or commercial beneficiaries. Furthermore, the efforts improve more than the accuracy of payment. Benefits also include fewer erroneous and rejected claims, more accurate data for quality measures and STAR ratings, timely updates of key metrics, less dependence on disruptive year-end chart reviews, more patient-centered care processes, and a more complete patient EMR available to network physicians.

According to Mr. Stone, the focus on accurate risk adjustment must be integrated into an organization’s strategic culture. Duke’s “payer agnostic” approach addresses activities across the revenue cycle, including patient access, revenue management, billing and collection, clinical documentation improvement (CDI), and compliance. At its core are these interventions:

  • Education for primary care physicians
  • Identification and outreach to members without office visits
  • Use of alternative visit types to ensure coordination and continuity of each member’s plan of care
  • Refinement of the problem list (prioritized patient list for care managers; alerts to gaps in documentation for providers)
  • HCC training for coders
  • Evaluation of discrepancies between provider encounter codes and claims received by payers (e.g., EMR limits the of number of diagnosis fields; additional diagnoses are truncated from claims)

Duke Health’s focus on HCC risk adjustment is consistent with what other health systems are doing to manage value-based payment. Last year in an open discussion at the 3M Client Experience Summit, revenue cycle managers described organization-wide initiatives to support value-based payment. The efforts involve their revenue cycle, managed care, risk management, and analytics/informatics teams who review and identify best practices for documentation, coding accuracy, denial management, quality reporting, and compliance as they affect the evaluation criteria in VBP contracts. The results are more accurate claims and risk scores.

Kristine Daynes is senior marketing manager for payer and regulatory markets at 3M Health Information Systems.

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