Medicare Advantage CMS Risk Adjustment

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Medicare Advantage CMS Risk Adjustment
Financial Impact

Developed by ICE (Industry Collaboration
Effort)

• November 2005

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Agenda

• What is Risk Adjustment?
• Overview of CMS Payment Methodology
• Financial Impact of Missing Encounter Data
• How You Can Help
• Resources

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What is Risk Adjustment?!

• Risk Adjustment is the term CMS (the Centers
  for Medicare and Medicaid Services) uses to
  adjust payment based on the health status and
  demographic characteristics of an enrollee
• The more relevant diagnoses a member has, the
  higher the members health risk and
  consequently, the higher the payment to the
  health plan
• Of the 15,000 ICD-9 diagnosis codes, only about
  3,100 are relevant to the risk adjustment
  payment formula

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Overview of CMS Payment

• For 2005, CMS pays Medicare Advantage (formerly
  MC) health plans based on
• Demographic Formula Risk Adjustment Formula
  Total Payment
• 50 50
  100
• For provider groups who are paid on a percent of
  premium basis, any unreported relevant diagnoses
  will ADVERSELY IMPACT your payment from the
  health plan.
• For FFS providers, unreported relevant diagnoses
  may adversely impact Pay for Performance
  programs or gain-sharing programs
• ICD-9 Coding is KEY to determining
• payment rate

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Importance of Risk Adjuster Formula is Growing !!

• Why is Encounter Reporting now so important...

The importance of Encounter data will continue to
grow, as CMS phases in the Risk Adjuster
Formula to be 100 of our payment calculation.
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Features of the Risk Adjustment Formula

• Called CMS - HCC Model (Hierarchical Condition
  Categories)
• Considers demographic (age/ sex/ medicaid status,
  etc.) data
• Considers diagnostic data (for chronic
  conditions)
• Pays more for less healthy members
• Predictive - This years diagnostic data basis
  for next years payments
• 3,100 ICD-9 codes--gt70 HCC Groups
• Each HCC Group has a factor that adjusts up
  base payment
• Diagnosis of condition must be reported at least
  every 12 months to continue payment at that rate
• Every time you evaluate a memberdocument it and
  report it!!
• Accurate chart documentation and diagnosis
  reporting now determines reimbursement

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Data Sources

• Inpatient data
• Hospital Outpatient data
• Face-to-face Physician / PA / NP visit data
• Includes SNF, Hospital and Hospice visits
• Exception pathologists radiologists arent
  required to see patients to perform their
  services
• Exclusions
• SNF, Hospice, and ICF (Facility Components)
• Lab, Radiology, Ambulance, DME, Prosthetics,
  Orthotics, and ASCs
• Members flagged as Hospice

• Physician data 75 of the data submitted

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Financial Impact

• Female
• 76 years old
• Medicaid eligible
• COPD
• CHF
• vascular disease with complications

Approximate Direct Subsidy to the Health Plan
from CMS, based on 2004 Los Angeles County Rates.
A portion may be allocated to the medical group
/ IPA based on contract terms with the health
plan.
 
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Financial Impact - Top Occurrence of HCC
Maybe Diabetes without Complications should be
reported as something more specific.!
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Financial Impact - Diabetes

• List each diagnosis separately with the
  individual manifestations.
• If the patient has multiple complications and
  manifestations, code each one separately!

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How You Can Help - Most Important

• If its not documented,
• then
• it didnt happen!

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References

• ICD9 CM DX Training
• Web Based Training available via CMS Web Site
• http//www.cms.hhs.gov/
• Go to Providers
• Click on Physicians
• Search Box coding
• Click on ICD9 CM Diagnosis Coding
• Click on Web Based Training (WBT) for ICD-9
  Coding
• Click on Web/Computer-Based Courses
• Free ICD9 DX Coding web site www.flashcode.com
• Risk Adjustment http//www.iceforhealth.org/librar
  y/default.asp?
• CurrentCategoryID167category167