December 18, 2020 | By Paul Spencer, CPC, COC
“Risk adjustment,” as defined by CMS, is a method by which Medicare Advantage plans are compensated for demonstrating that the Medicare patients they cover under Part C plans are sicker than those covered under traditional Medicare or other plans. Increasingly, when I speak to practices, their individual definitions of risk adjustment are directly proportional to the amount of time they have spent pulling records for patients insured under Medicare Advantage plans. In most cases, practices do not see a benefit to risk adjustment because of the administrative burden placed upon them by the carriers.
For many reasons, this is a mistake, but in a world where practice finances have been rocked by the COVID-19 pandemic, making such a determination has the potential to be economically devastating to physician practices.
We now stand less than two weeks from the implementation of the 2021 E/M guideline changes. By focusing more attention on the assessment and plan portion of an encounter note, these changes will go a long way towards clarifying, by documentation, which conditions are being meaningfully assessed during an encounter. This should have the downstream effect of strengthening how we define the acuity of conditions managed during an encounter.
Despite the financial benefits of embracing risk-based contracts from Medicare Advantage carriers, I personally know of very few physician practices that have dedicated themselves to this reimbursement model. To those who haven’t, and this more than likely encompasses a large part of the readers of this tip, I would argue that there is no time like the present.
The largest barrier to embracing the model, up to this point, has been documentation guidelines in the office setting, which led to EMR templates that make it difficult to clearly ascertain not only the severity of the illnesses assessed, but in some cases, what conditions actually were assessed. The clarifying language found in the 2021 E/M guidelines are an enormous step forward to breaking down this barrier.
If documentation clearly shows an assessment of a condition, it can clearly demonstrate the risk of the patient. With this in hand, the practice begins to develop a risk profile for the patient, which translates to a risk score with the Medicare Advantage plan. In the case of a risk-based contract, rather than the practice having a “reactive” model, where the Medicare Advantage plan requests documentation retroactively to verify reported conditions and acuity, the practice follows a “proactive” model, where it reports conditions meaningfully assessed during an encounter. Acuity will now be clearly defined in each encounter, freed from the shackles of documenting irrelevant or repetitive reviews of systems, or having to capture elements of patient history that aren’t needed to address presenting problems. Gone too will be templated physical exams that confuse the assessment.
Knowing that risk scores drive reimbursement under risk-based contracts, and knowing that documentation of risk is about to be dramatically clarified, now is the time to consider a risk-based Medicare Advantage contract. While insurers are currently dragging their feet regarding contracting issues as the pandemic continues, making plans now for risk-based Medicare Advantage contracts in a post-COVID world will assist in softening the long-term economic impact of the pandemic.