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CMS Risk Adjustment Payment Methodology


Previous reimbursement methodology was based solely on demographic information ... Example: Radiologist or Pathologist report provides an impression (diagnosis) ... – PowerPoint PPT presentation

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Title: CMS Risk Adjustment Payment Methodology

CMS Risk Adjustment Payment Methodology
The Role of Physicians and Supporting Staff
Presented by Pam Holt, PacifiCare
  • Change Payment Methodology - mandated by BBA
  • CMS chose a risk model based on chronic additive
  • Previous reimbursement methodology was based
    solely on demographic information (age/ sex/
    medicaid status/ county of residence, etc.)
  • Risk Adjustment pays more accurately for the
    predicted health cost expenditures by adjusting
    payments based on health status as well as
  • Payments are higher for less healthy members and
    lower for more healthy members
  • Accurate chart documentation and diagnosis
    reporting now determines reimbursement

Risk Adjustment Models
  • Beginning January 2004 - CMS-HCC
  • Hierarchical Condition Category Model determines
    a portion of the per member payment
  • Payment in 2004 is based on 30 risk adjustment
    and 70 demographic data 2005 50 risk
  • 70 disease categories over 3,100 diagnoses
  • Additive model includes all qualifying
  • Predictive Model 2005 payment based on CY2004
    encounter data
  • Health Status is re-determined each year

Data Sources?
  • Inpatient data
  • Hospital Outpatient data
  • Face-to-face Physician / PA / NP visit data
  • Exclusions
  • SNF, Hospice, and ICF (Facility Components)
  • Lab, Radiology, Ambulance, DME, Prosthetics,
    Orthotics, and ASCs
  • Members flagged as Hospice ESRD

Whats the Big Deal?
  • Risk Adjusted portion of the premium is
    increasing to 100
  • Physician data 80 of the data submitted
  • Physician diagnosis coding will determine the
    amount CMS pays per member
  • Is your documentation sufficient to fund the care
    for your sicker patients?
  • The quality of diagnosis coding must improve in
    order to maintain the same

100 When?
  • 90 demo/10 risk
  • 70 demo/30 risk
  • 50 demo/50 risk
  • 25 demo/75 risk
  • 100 Risk
  • 2000 - 2003
  • 2004
  • 2005
  • 2006
  • 2007

Financial Impact PIP-DCG vs CMS-HCC
  • Female, 76 years old, Medicaid eligible, COPD,
    CHF, vascular disease with complications

How much does it matter?
It All Begins with You !
  • Goal Properly Reflect the Members Health
  • Fully Assess All Chronic Conditions
  • …at least annually
  • Thoroughly Document in the Chart ALL conditions
    evaluated each visit
  • Code to the Highest Level of Specificity (fully
    utilize the ICD-9 Diagnosis Coding System)

Top Ten Frequent HCCs by Occurrence (from FFS
Medicare data)
  • HCC108 - COPD
  • HCC80 - CHF
  • HCC19 - Diabetes without complications
  • HCC105 - Vascular disease
  • HCC92 - Specified heart arrhythmias
  • HCC10 - Breast, prostate, colorectal and
    other cancer tumors
  • HCC83 - Angina
  • HCC96 - Ischemic or unspecified stroke
  • HCC38 - Rheumatoid arthritis infl conn…
  • HCC82 - Ischemic heart disease
  • 12.17
  • 11.17
  • 10.79
  • 9.36
  • 8.93
  • 6.99
  • 5.04
  • 3.97
  • 3.85
  • 3.82

How can you help?
  • Physician is responsible for ensuring that coding
    adheres to ethical standards
  • Physician office staff responsible for coding
    should understand the fundamentals of ICD-9
  • Code exactly as you/they would for FFS except use
    all applicable codes
  • Update codes every year in October (codes are
    time sensitive, based on dates of service)

How can you help? (contd)
  • Rules for Coding in the physician office are
    different than the rules for inpatient hospital
  • Physicians must not code probable, suspected,
    questionable, rule out, or working
  • Rather, code the conditions to the highest degree
    of certainty for that visit, such as symptoms,
    signs, abnormal test results, or other reasons
    for the visit.
  • Later when the certainty of the condition is
    known, then it can be documented in the medical
    record, dated, and coded for reporting.
  • (Note Doctors can document rule out, they just
    cant code it.)

Correct Coding Tips
  • ICD-9-CM Official Guidelines for Coding state
  • Code all documented conditions that coexist at
    time of the encounter/visit, and require or
    affect patient care treatment or management. Do
    not code conditions that were previously treated
    and no longer exist. However, history codes
    (V10-V19) may be used as secondary codes if the
    historical condition or family history has an
    impact on current care or influences treatment.

Correct Coding Tips
  • The Diagnosis Portion of ICD-9-CM consists of two
  • Disease Index
  • Alphabetical - aka Volume II of ICD-9-CM
  • Index of diseases and injuries leads the reader
    to a code in the Disease Tabular section to
    determine if it is the most specific code
  • Disease Tabular
  • Numeric - aka Volume I of ICD-9-CM
  • Numeric listing of codes organized primarily by
    body system.
  • Much more detailed than the Alphabetical Index

Correct Coding Tips
  • ICD-9-CM Coding to the Highest Level of
  • Diagnosis codes have 3, 4 or 5 digits
  • Diagnoses should be reported to the highest level
    of code available for that category
  • In selected cases, the fifth digit may impact
    whether the code is in the model, but at a
    different HCC level, which could impact
  • Myocardial Infarction (MI) 410.XX, unspecified or
    subsequent episode fifth digits 0 and 2 HCC82
  • All initial care for a new MI, should have the
    fifth digit of 1 and group to HCC81
  • Old MI (412) is in the model

Correct Coding Tips
  • ICD-9-CM guidelines may require combining two or
    more conditions into one code
  • Only use a combination code if … it fully
    describes the patients condition
  • Hypertensive heart disease with congestive heart
    failure requires only one code 402.91
  • Using the Hypertensive heart disease code by
    itself, does not risk adjust
  • See Asthma with COPD example in handout
  • Conversely there are many instances where more
    than one code is required to fully describe a
    patients condition

Coding Tips (contd)
  • Multiple Coding Techniques
  • When the terms code also, code first, or use
    additional code are included in the ICD-9-CM
    code book for a particular code, follow the
    instructions to fully code the patients
  • For example
  • Dementia in multiple sclerosis requires two
    codes 340 for the underlying multiple sclerosis,
    and 294.10 for the manifestation of dementia.

Correct Coding Tips
  • Clinical Specificity in Documentation Leads to
    Correct Coding
  • Correct coding can make the difference between a
    code that does or does not trigger additional
  • Anemia (285.9) is the most commonly coded form of
    anemia in physician offices. However there are
    many types of anemia. Some are in the model and
    some are not. i.e if Neutropenia is used to
    describe the anemia, then 288.0 (agranulocytosis)
    may be coded HCC45.
  • Pneumonia (486) unspecified is not in the model.
    If the organism responsible for the pneumonia
    (HCC111-112) is known, or if the physician
    documents that the patient aspirated prior to
    developing the pneumonia (507.0 HCC111), the more
    specific code should be reported.

What to Code??
  • Complete Diagnostic Coding, not just primary
  • Providers must report all diagnoses that impact
    the patients evaluation, care, and treatment
  • Main reason for visit
  • Co-existing acute conditions
  • Chronic conditions (such as Atrial fibrillation,
    CHF, Chronic Renal Failure, Rheumatoid arthritis,
    Crohns disease, Diabetes, COPD/ Asthma,
  • Pertinent past conditions
  • E-codes (external causes of injury and poisoning)
  • V-codes (factors that influence health)

Most Important Coding Tip
  • If its not documented,
  • then …
  • it didnt happen!

Documentation Tips
  • Clear, Concise, Consistent, Complete, and
  • SOAP Approach Subjective, Objective,
    Assessment, Plan
  • Problem List Approach a numbered and dated
    index of patients problems kept in front of
    medical record, from identification through
  • Chart/Progress Notes Pages Template to prompt
    complete evaluation documentation

Documentation Basics
  • Reason for Visit This is the chief complaint of
    the patient
  • weakness, headache, and liver cancer
  • Care Rendered This is what was done to address
    the chief complaint.
  • examination and blood work
  • Conclusion and Diagnosis This is the outcome of
    the findings based on the care rendered.
  • Anemia with coexisting conditions of Adult onset
    diabetes, neuropathy, COPD, and Asthma

What else?
  • Use only standard abbreviations and keep them to
    a minimum
  • Each physician office should have a standard
    abbreviation list.
  • (LBP can mean Low Blood Pressure or Low Back
  • Each page of the chart must identify the patient
    by name, or patient ID number

Superbill / Charge Ticket
  • Designed to include most frequently used
    procedures and diagnoses
  • Include as many diagnoses as possible, and prompt
    coding to the highest level of specificity
  • Ask physician for more clarification
  • Review Annually Update as needed
  • ICD-9-CM CPT Codes can change annually
  • Specific, not generic, diagnosis codes
  • Include Diagnosis Codes in the HCC Model

CMS Data Validation
  • CMS audits charts to confirm the diagnosis exists
    in the patients medical record for the period
  • Requires compliance by the Health Plan, Group
    Physicians office to pull/review the charts
  • Discrepancies will result in payment adjustments
  • Example Radiologist or Pathologist report
    provides an impression (diagnosis) that is in the
    HCC model, patients physician must subsequently
    confirm that diagnosis and document in the
    medical record

ICD9 CM DX Training
  • Web Based Training available via CMS Web Site
  • http//
  • Go to Providers
  • Click on Physicians
  • Search Box coding
  • Click on ICD9 CM Diagnosis Coding
  • Click on Web Based Training (WBT) for ICD-9
  • Click on Web/Computer-Based Courses
  • Free ICD9 DX Coding web site

  • Complete and Proper Chart Documentation
  • Diagnosis Coding to the Highest Level of
  • Design Fee Tickets to Support Correct Diagnosis
  • ICE Web Site
  • The following link will take you to the ICE
    Library where some of the HealthCare Partners
    sample super bills can be viewed.
  • Conduct Complete Evaluation of Chronic Conditions
    at Least Annually