Risk Adjustment and Value-Based Payments

August 12, 2019 Jeanette Stern

Healthcare is constantly changing.  That's part of what makes it fun for people who work in the field.  Constant change means nothing is ever boring, and new innovations mean there are always opportunities for growth. 

One such innovation is the increasing popularity of Value-Based payment programs.  This new structure is gaining ground, and that's a good thing.  Value-based care is better for everyone.  Providers, payers, and patients all benefit from incentivized performance. 


Value-Based Payments

Value-based payments are incentives paid to providers for performance.  Sometimes these payments replace payment for services.  Other times these payments are given as bonuses, in addition to a payment for services provided.

Anyone who works with Medicare Advantage plans will understand the value-based payments, or VBP.  Stars and HEDIS measures are a type of VBP.  For these measures, meeting the threshold means more money from CMS for the payer.  In some cases, payers also incentivize providers by offering them a share in the bonus if measures are met. 

Other VBP arrangements work similarly.  Providers are required to meet certain goals in order to receive a payment.  In cases where there's downside risk involved, providers may also lose money for poor performance.  

CMS is encouraging these types of payment arrangements.  There are quite a few programs payers and providers can participate in that use some form of VBP for Medicare members.  


CMS Value Based Payment Programs

Here's a quick overview of the most recent programs value based programs.  These programs were implemented under MACRA, which stands for the Medicare Access and CHIP Reauthorization Act.  This bill was passed in 2015, and spun off two CMS VBP programs:

  • MIPS: Merit-Based Incentive Payment System.  This program rewards physicians for performing well on certain measures, including quality and cost.  
  • APM: Alternative Payment Models.  This program encourages providers to form risk bearing entities.  Payments are then tied to quality outcomes.  Shared savings arrangements and ACOs qualify as APMs, among other models.  


Risk Adjustment and Value-Based Payments

 It seems like VBP are the way of the future.  CMS is invested in them, as are some commercial payers.  But what does that mean for Risk Adjustment?  

CMS uses the HCC model to determine payment for APM programs.  The rules are slightly different than for traditional Medicare Advantage payers, which is all the more reason to have experienced Risk Adjustment partners to help achieve goals.  

Just because physicians are now bearing risk for payments that rely on Risk Adjustment doesn't mean they are experts in coding conditions for Risk Adjustment.  Unlike Medicare Advantage plans, APMs cannot submit supplemental charts to optimize risk score.  Codes need to be recorded on a claim to count towards the risk score. 

Health Risk Assessments can be used for Risk Adjustment coding for APMs, as long as the codes are submitted on a claim.  Even though physicians bear risk in APM arrangements, they still may miss suspected codes, or bill incorrectly.  Incorrect billing may lead to CMS excluding codes that should count towards risk score.  Health Risk Assessments performed by a knowledgeable vendor can capture those codes, assuring an accurate risk score and complete payment.

Risk Adjustment is complicated enough for Medicare Advantage.  Now, APMs have to think about Risk Adjustment optimization, too.  Many of the organizations running these programs don't have a lot of Risk Adjustment experience.  For information on how we can be a part of any Risk Adjustment strategy, contact us.

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