How Healthcare Risk Adjustment and Detailed Documentation Can Improve Member Care

Healthcare risk adjustment plays an essential role in the health plan-provider relationship. At the center of this relationship is patient data, collected at the hospital and provider practice level and shared with health plans.

Having comprehensive and accurate data not only leads to a successful risk adjustment program during audits but also allows organizations to make better-informed decisions to positively affect patient outcomes. However, to obtain high-quality data, organizations need robust tools and technology to get the job done.

This blog will discuss what risk adjustment is and how the right tools can improve risk score accuracy and patient care.

What is Risk Adjustment?

Risk adjustment is a statistical way to calculate the appropriate compensation to health plans based on factors such as a patient's health, their likelihood of using healthcare services, and the cost of providing those services. This process assigns each health plan member a "risk score" used to represent and estimate the cost of treating the member annually.

Risk scores are based on a member's active chronic medical conditions and required services. Medical diagnoses are grouped into categories of conditions that share cost patterns called Hierarchical Condition Categories (HCCs). Some examples of HCCs include diabetes with complications, diabetes without complications, multiple sclerosis, and congenital abnormalities.

The goal is to ensure that the plan member's health status, conditions, and demographics are accurately documented and that the health plans are adequately compensated for managing the beneficiaries.

Why is Risk Adjustment Important?

When risk scores are not accurate and fail to reflect the health status of the patient, the health plan may be over or underpaid for managing the care of their members. This can result in lost revenue that's due to the health plan and increase the risk of non-compliance.

In 2023, 30.8 million people were enrolled in a Medicare Advantage plan, representing 51% of the total Medicare population and accounting for $454 billion of total Medicare spending.¹ The Centers for Medicare & Medicaid Services (CMS) keeps a close eye on spending by using its Risk Adjustment Data Validation (RADV) program. This auditing program helps CMS recover improper risk adjustment payments where Medicare paid Medicare Advantage Organizations more than they otherwise should have because of unsupported medical diagnoses.

Health plans that serve Medicare Advantage beneficiaries are paid a monthly, per-member payment in exchange for accepting the full responsibility-risk-for their enrollee's healthcare costs.

After the Affordable Care Act (ACA) passed in 2011, health plans were prohibited from denying coverage to members with pre-existing conditions. Before the ACA, health plans could offset their risk by attracting healthy members and avoiding those with chronic conditions.

Healthcare risk adjustment helps level the playing field so that health plans are funded appropriately for assuming the care for patients no matter their healthcare needs and pre-existing conditions.

This is why it is important to have the tools and technology in place to successfully conduct risk assessments that accurately reflect the cost of treating members with full documentation.

How Tech Powers Accurate, Detailed Documentation

In value-based healthcare models, accurate medical charting and coding are essential in the risk adjustment process. Proper documentation captures the patient's total health status and chronic conditions while mitigating the risk of under or overestimating their healthcare needs.

One of the best ways to effectively chart and code is by using data tools that detect patterns and trends. With a robust analytics program, organizations can improve utilization efficiency, documentation, quality outcomes, and patient retention.

How Converged Patient Assessment Can Help with Healthcare Risk Adjustment

Having access to the right tools and technology can make all the difference when doing risk adjustment. For organizations needing a better risk adjustment program, Inovalon may have the solution.

Converged Patient Assessment is a cloud-based point-of-care tool with advanced analytics to drive clinical documentation with providers. With Converged Patient Assessment, organizations can:

• Quickly improve risk scores with minimal overhead
• Empower member engagement with nationwide coverage
• File compliance documentation across all lines of business
• Accelerate risk adjustment and quality gap closures

For a more detailed breakdown, click the link to learn more about Converged Patient Assessment.

1 "Medicare Advantage in 2023: Enrollment Update and Key Trends," Aug. 9, 2023 https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2023-enrollment-update-and-key-trends/

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