risk adjustment or are a is a method used to adjust CMS payments to health plans so that payments accurately reflect the health status and risk of enrollees in a cover population. CMS and other entities that utilize risk adjustment look at the total populations they serve, determined an average patients health status or disease burden and set that burden as a risk score off one point. Sicker, riskier patients have a higher score, and healthier folks have a lower score. In a simple example of risk adjustment, think of three physicians Dr Smith, Dr Jones and Dr Green, each with 100 patients. But first, a quick step back as you're examining the last module coding provides the payer and CMS the information to calculate the health and risk of the population. Risk adjustment calculations specifically, look at the diagnosis codes assigned to the provider membership to determine the health of a population, a topic you will explore later in this module. As our graphic shows, Dr Smith has a higher percentage of sicker, riskier members and an average risk score of 1.1. She would thus receive a 10% higher reimbursement rate to cover the cost incurred by the sicker population. Dr. Jones has a healthier group of members and a risk score of 0.9. He would receive a 10% lower reimbursement rate, since the population is healthier than average. And our third physician, Dr Green, has a mix of average risk and gets a risk score of one point. She would receive the average reimbursement rate because the health and risk of her patients are in line with the rich score set by CMS or other financing entities like a state Medicaid programs risk scores are calculated using complex algorithms to analyze demographic, health conditions, age and gender to identify and adjust for individuals who have chronic conditions and other factors that lead to higher than average cost. As Medicare Medicaid recipients have moved to private Medicare Advantage or Medicaid managed care plans. Risk adjustment programs have become critical to ensure payers are able to cover the cost of enrollees with chronic conditions that are higher risk under the A. C. A. Private health insurance, which previously used medical underwriting and denial of insurance for those with pre existing conditions but can no longer do so, has also adopted risk adjustment payment models and plans to ensure a fair market place. Medicare Advantage, the A, C. A s individual marketplace and Medicaid all use risk adjustment models as shown on this chart. Let's look at the similarities and differences. As noted, earlier Risk adjustment models are sophisticated algorithms developed by actuaries to identify patients who are likely to have higher or lower than average medical cost. Medicare Advantage Risk adjustment has managed through the CMS hierarchal condition categories. Model for the individual marketplace has managed through the U. S. Department of Health and Human Services. A similar HCC models utilize to adjust premiums for a CIA compliant health plans not allowed to discriminate based on health status or to deny coverage. Most states utilize the chronic illness and Disabilities Payment system CDP s model with an additional model for prescription drug utilization. The payment structure differs for each risk adjustment model. Medicare Advantage and Medicaid models have perspective payment structures, but with some timing differences. Perspective models look at the risk profile of the current population to adjust next year's payment rates. Future payments for Medicare advantage are just it twice a year plus one lump song, reconciliation, payment, Medicaid models have future payments that are adjusted quarterly or annually, depending on the state. The individual marketplace risk adjustment has a concurrent aggregate payment structure in which payments occur once a year on June 30 of following the program year. It's called concurrent, but it feels to most health plans like it's retrospective, since the risk adjustment is paid six months after the end of the year. In the case of plans with a lower than average risk adjustment score revenue is taken back by HHS six months after the end of the year. Risk scores for Medicare Advantage members are individual and based on age, gender, geography and diagnosis. Individual marketplace risk scores are similar to Medicare advantage scores and that they are based on age, gender, geography and diagnosis. Medicaid basis. Risk scores on age, gender, geography, diagnosis and Medicaid population. In other words, either low income as measured by a temporary assistance for needy families. T A. N f or disabled as measured by supplemental security income. S S I risk scores are calculated differently for different plans for Medicare advantage. Risk scores are calculated by the individual in the individual marketplace. Risk scores a group at the plan level by risk pool and by the state and or legal entity. Similarly, Medicaid individual member risk scores a group at the plant level but also based on population type and age band. There are different data submission deadlines for each risk adjustment model commercial and Medicaid risk adjustment are aggregated and budget neutral and have a zero psalm sediment. This means that every extra dollar one plan receives comes from one of the other plans. For example, let's look at three health plans. Plan A Plan B and Plan C. Plan A has a sicker than average population. While Plan B has a healthier than average population and plant seeds population is of average. Health planning gives 10% of its revenue to the government. To give Plan B, it's 10% additional revenue to cover the cost of its members. Plan C is neither old nor pays any risk adjustment dollars for Medicare Advantage plans. Payments are made based on individual member risk scores. Because the benchmark plan is traditional Medicare coding model. Each line of business uses a specific model for condition categories, generally categories or groupings of I C D 10 diagnosis codes that have been shown to result in higher coast Medicare Advantage uses I C D tin codes grouped into the 83 h. C. C. S. The marketplace uses I C d 10 codes grouped into 127 h. C. C s Medicaid uses I, C d 10 and N D. C. Codes Group into 50 to see DPS categories and 15 Medicaid prescription categories to deeper your understanding of risk adjustment, including how important risk adjustment is becoming to physicians. Download the to resource is from Berko and Yates and Sanghvi and the sources to explore section of this module.
