Risky business: The coder's role in risk adjustment

You cannot get through a day in healthcare without hearing something about Alternative Payment Models (APMs), the shift from volume to value, budget payments, risk-adjusted contracting — the list goes on. It’s indicative of a changing landscape in healthcare reimbursement. As coders, we need to understand these methods and realize how our coding impacts them.

In the fee-for-service world, reimbursement is tied to the CPT and HCPCS codes we submit. We have spent a lot of time and resources helping providers understand how to document the difference between 99213 and 99214 because there is an average difference of $35 to $40 between them with little concern about whether or not there were any chronic conditions or comorbidities to report and code. Why? Because it wouldn’t change the reimbursement. In fee-for-service, 99213 for a patient with a femur fracture pays the same as a 99213 for a patient with a femur fracture, osteoporosis, uncontrolled diabetes, kidney failure and COPD.

As risk-adjusted payment models become more prevalent, providers and coders alike will be required to break out of the mindset of fee-for-service coding and change our ways. Not only will our diagnosis coding establish medical necessity for the visit, it will play a crucial role in determining patient risk scores and, ultimately, reimbursement.  

The concept is not new. Since 2004, Medicare has been using Risk Adjustment Factors (RAFs) to adjust payments to Medicare Advantage plans using the Centers for Medicare & Medicaid Services Hierarchical Condition Category (CMS-HCC) model. This model was critical to ensure Medicare Advantage had the necessary resources to provide quality care to its members.

As with most coding, documentation is critical. Consider this simple example: 

A 65-year-old female with a fracture of the lower end of the right femur:

A 65-year-old female with a fracture of the lower end of the right femur and documented obesity:

Notice there is no change in the two examples as not all diagnoses fall under an HCC, but if the provider documents a 65-year-old female with a fracture of the lower end of the right femur and submits documentation supporting a diagnosis of morbid obesity:

These examples show coding to the highest level of known specificity. The difference between obesity, not otherwise specified, and morbid obesity changes the overall reportable RAF score.  

If your patients are sicker than most, let it show through proper documentation and coding.

HCC is just one type of model for risk-adjusted coding, but all of the models have something in common: They all use diagnosis data. Documentation is the key to proper ICD-10 diagnosis coding. Following these simple steps can help achieve a successful transformation to risk-adjusted coding:

• Query all coding staff. Do they understand the basics of risk-adjusted coding?
• Engage and educate providers about the importance of completeness and specificity in their documentation. Remind them: If it isn’t documented, a coder can’t code it.
• Follow the ICD-10-CM official guidelines for coding and reporting. Code all documented conditions that affect patient care at the time of the visit.
• Review coding policies and procedures. Identify any quality coding gaps (provider, medical record, superbill, coder).
• Break the fee-for-service mindset. Resist the urge to code the minimum necessary for fee-for-service payment.

As the pressure to reduce healthcare costs rises, so does the drive to implement APMs across multiple payer lines. Government and commercial payers alike are working to incentivize providers to control costs while increasing quality care for their patients. Coders should not underestimate the role they play in delivering accurate quality data to these plans.