The New Age of Healthcare Risk Adjustment

Whitepaper | Jimmy Liu
Vice President of Risk Analytics at Change Healthcare

Responsible for supporting the company’s Medicare, Medicaid, and Commercial ACA lines of business, with a focus on analytics, strategy, and innovation. He was one of the original developers of the Risk View™ application, which helps plans receive appropriate payment based on the relative health of the at-risk population. As an expert in risk adjustment and risk scoring models, Jimmy has been helping health plans better understand and formulate their risk adjustment strategy for the past 10 years.

As pandemic-driven economic instability proliferates and exacerbates pre-pandemic challenges in the U.S. healthcare system, health plans must act quickly to address member healthcare needs, collect data to effectively treat at-risk populations, and accurately document risk scores. Failure to do so not only puts more people at risk for catastrophic health costs but puts health plans at risk to not receive appropriate premium revenue or compensation to cover medical costs for their members.

To address these new realities, payers must accelerate the development of a cohesive approach to risk adjustment. Implementing a holistic strategy can help improve risk scores, leading to more accurate reimbursement and better-quality performance. Developing and implementing such a strategy begins by enhancing member and provider engagement to facilitate more healthcare visits and more accurate documentation at the point of care.

In this paper, we make the case for why payers must take a comprehensive, end-to-end approach to their risk adjustment strategy. This document provides a road map to help identify key points in the process and improve diagnosis code capture to achieve risk adjustment goals.

Traditional Risk Adjustment Considerations

The historic levels of unemployment spurred by the COVID-19 pandemic continue to lead to the loss of employer-sponsored healthcare coverage. In fact, over 26 million Americans lost their employer-sponsored health coverage as a result of the pandemic and other related economic influences.¹ And although a resolution to the COVID-19 crisis could be on the horizon, the impact on health insurance coverage is anticipated to continue into the foreseeable future.

Risk adjustment challenges are nothing new. Health plans have long needed to continuously monitor and react to regulatory changes and make corresponding adjustments to their risk analytics. They must maintain compliance programs to ensure the accuracy of data submitted to the government for payment. And they need to minimize system inefficiency and poor provider documentation––the primary reasons why risk adjustment is necessary. Factor in the need to adhere to tight timelines, and to transform data to meet complex government requirements, and the risk adjustment challenge is clear. They must do all of this with dwindling resources, and now face additional hurdles posed by the pandemic.

What is Driving the New Normal?

Short-Term Impact of New and Dynamic Market Conditions

Since mid-March, professional claims volume has plummeted to a fraction of past levels. Patients are not visiting their providers’ offices as often. This decrease in healthcare utilization creates a positive short-term revenue impact for payers. However, it also creates new challenges for managing risk in government-sponsored health plans and will reduce risk adjustment revenue for payers.

Unemployment is driving increases in Medicaid and ACA enrollment. These new member populations are not like traditional Medicaid enrollees and their healthcare utilization will be different. They may not stay within the system for long, and their healthcare coverage may fluctuate. And covering Medicaid and Affordable Care Act (ACA) members provides less revenue for payers than employer group commercial insurance plans.

Unemployment and economic instability will increase the need for at-risk populations such as Medicare Advantage (MA) members, Medicaid members who may experience housing and food insecurity, and ACA members who are unable to pay for coverage.

These populations face new social determinants of health (SDoH) challenges and need more support. And if they don’t get support, their health could suffer. There is now an opportunity for health plans to engage members to help get them to visit the doctor and provide health education. Additionally, they can provide value-added services such as addressing SDoH and get them connected to the services they need such as telehealth services, food banks, pharmacies, etc.

Risk Score Will Fall

Risk scores will decline because of fewer office visits and elective procedures, therefore fewer claims and diagnosis codes will be captured to identify and close risk gaps. Initial Change Healthcare market analysis estimates an average 5% reduction in scores––a figure that will only increase compared to traditional scores as the pandemic continues. The longer this continues, the larger the gap will be relative to “normal” years. Additional waves of the pandemic could thwart attempts to close risk gaps prior to the year’s end.

New Approaches for the New Normal

End-to-End Approach Drives Results

With this in mind, there is now an urgent need to address pent-up demand for care. New members might not have seen the doctor since the pandemic began in mid-March (often earlier). As a result, they do not have their conditions reported and have virtually no risk score. With limited time each year to gather documented conditions, it's critical optimize risk adjustment programs.

Virtual care technologies such as telehealth present opportunities to assess such patients and capture appropriate diagnosis codes. New or enhanced opportunities also exist to boost risk revenue, such as provider engagement, increased code capture, and identifying and enrolling additional dual-eligible members.

The following are key steps and technologies payers can implement to help improve risk adjustment in this tumultuous environment.

Strategies for Prospective, Collaborative, and Innovative Risk Adjustment

Opportunities to improve risk capture must be considered––particularly as the country faces additional waves of COVID-19 infection.

The rapid expansion of telehealth created new opportunities for managing risk in this new era, and the Centers for Medicare and Medicaid Services (CMS) supports this effort–at least in the short term. Telehealth visits might not be as qualitatively or quantitively valuable as in-person visits, particularly in the case of new patients (an increasingly likely conundrum as health plan membership fluctuates). However, telehealth does offer an opportunity to capture information.

The issue with telehealth lies in coding concerns. Virtual care “visits” may not be as ideal as in-office visits, and coding quality may suffer as well— making risk adjustment more important. Some telehealth visits will be with new patients, in which physicians may not have access to the patient’s medical history and may only attend to acute conditions.

In the long term, poor coding could have an adverse impact on risk adjustment if telehealth gains volume at the expense of in-office visits.

Leverage Analytics for Actionable Insight

Analytics is an overarching and critical capability for enabling better risk-adjustment strategies. Integrated risk-adjustment analytics can help generate risk scores for your membership and identify optimal chase lists for various improvement initiatives, including, retrospective, prospective, and member- or provider-focused opportunities.

The analysis of risk scores using the specific risk-adjusted model Hierarchical Condition Categories (HCCs)—as defined by CMS for Medicare and ACACommercial models and state-based Medicaid programs—can be difficult.

Applying AI analytics can help close associated risk gaps by leveraging big data sources to identify member gaps and recovery opportunities. Beyond claims data analytics, incorporating alternate data sources, such as pharmacy and care management data, can help identify all possible risk gaps.

Today, artificial intelligence (AI) can be used to identify Medicare Advantage (MA) members who are most likely to qualify for Medicaid. Payers can then help the identified dual-eligibles prepare their application, monitor Medicaid approval, and complete annual recertification.

Develop a Holistic Engagement Strategy to Support Members

Before providers can adequately support patients, health plans must get them in front of a doctor. A comprehensive, holistic member engagement strategy is critical, and its campaigns should engage and educate members from initial onboarding through annual enrollment, including risk and quality gap closure.

Analytics can help develop a process to identify target populations. A sequenced campaign should be employed to deliver the right message, at the right time, using the members’ preferred method. Consumers prefer to interact with their providers and health plans via email, followed by website, and texts. Make the messaging targeted and engaging to create awareness and inform members about program value. Consider the most cost-effective modalities first and bundle outreach efforts to maximize efficiency and reduce member abrasion.

Collaborate with Providers

Health plans rely on providers to submit claims that capture accurate and complete diagnosis coding. Provider payment, however, is largely independent of diagnosis coding, and providers have not been critically engaged in risk adjustment procurement. This means physicians have little incentive or direct requirement to comply with health plan risk adjustment objectives.

While health plans often engage providers proactively to submit claims with full and accurate risk adjustment documentation, these programs typically are not aligned with existing workflows, and physicians may find it challenging to respond to initiatives from multiple payers. Factor in the financial pressures of diminished capacity, pandemic-related safety concerns, and the elimination/reduction of elective procedures, and the challenge of provider engagement is exacerbated.

However, the new normal has opened doors for payer-provider collaboration. Payers need support on proactively/prospectively capturing conditions, particularly risk-adjusting codes. Health plans should proactively work with providers to deliver education and improve collaboration. To support risk adjustment, providers can:

• Proactively reach out to patients/members to secure diagnosis information/updates
• Prioritize patients considering revenue opportunities and quality of care
• Review risk gaps in advance of visits
• Document/capture conditions at time of visit
• Include diagnosis code on submitted claims

Consider Operational Opportunities to Make the Most of Visits

Making sure that the previously mentioned pent-up demand for care has somewhere to go will help. Identify networks with capacity to address increases in demand, with an eye for those that can not only take on excess volume but do a good job from a cost and quality perspective.

Provide alerts in workflow: Make it easy for providers to support risk-adjusted by identifying gaps at the point of care – right in the electronic medical record (EMR). This is particularly helpful in shared risk opportunities.

Leverage Pre-Submission Opportunities

Identify potentially missing or incorrect diagnosis codes at the point of submission—before a claim reaches the health plan. When a provider submits the claim, they can prospectively check to ensure open gaps are considered and addressed. This allows the provider to audit their own behavior and offers the opportunity to identify gaps they may have missed.

Maximize the Impact of Chart Reviews

In the pre-pandemic world, there were approximately 240 million requests for clinical data annually. An astounding 90-94% of these requests were fulfilled manually via mail, fax, and manual uploads to portals, resulting in provider abrasion, inefficiency, and quality issues related to interoperability.

Accessing provider charts is difficult under normal circumstances, but with provider offices shut down or partially opened, and operating with limited resources, staff may not be able or willing to provide requested charts. Providers are busy with backlogged visits, which further stretches resources. The increase in missed or cancelled visits means fewer charts are available. Additionally, retrospective chart reviews have limits, and risk-adjustable diagnosis codes may go uncaptured when charts are irretrievable.

There is clearly an immediate need for alternative/ enhanced methods of retrieving medical records. While electronic retrieval of clinical care data is not new, nationwide access to the data in multiple EHRs has not been widely available until recently. Health plans must take advantage of these new solutions that help streamline and expedite data access, and simultaneously help payers retrieve a broader, more in-depth view of the member.²

Apply NLP to Risk Adjustment Coding

A recent study revealed that more than 25% of medical records contain substantiating evidence of risk factors not previously reported, which contributes to lower reimbursement for risk-bearing organizations.³

By integrating state-of-the-art natural language processing (NLP) and machine learning (ML) into the process, payers drive greater coder accuracy and productivity, improved overall efficiency, increased ROI with workflow prioritized by opportunity, and mitigated risk adjustment data validation audits through identifying coding errors and identifying unsupported claims.

The results of integrating NLP and ML into risk adjustment coding are compelling. In multiple engagements across a number of member populations, the technology has helped increase risk capture by 20-30% and elevated average correct risk category capture to 95%.⁴

Identify, Engage, and Support Dual Eligibles

Medicare Advantage plans can boost risk revenue with the addition of more dual-eligibles (those Medicare Advantage members who are also eligible and enrolled in Medicaid). This is an area where AI can be used to identify more duals in an identified member population. Behavioral science can be leveraged to improve engagement with these members to help them with their Medicaid application. Health plans also can consider opportunities for more valueadded services like identification of social needs to help facilitate enrollment in Medicare Part D or community-based organizations.

Conclusion

As policies and processes change and the pandemic exacerbates the challenges for health plans, they must employ innovative, collaborative tactics to evolve their risk adjustment strategies and keep pace with the new healthcare environment. Strategic payers will accelerate the development of a cohesive and holistic approach to risk adjustment to help improve risk scores to generate more accurate reimbursement and better-quality performance.

How Change Healthcare Can Help

For nearly two decades, Change Healthcare has helped government-sponsored health plans enhance their risk-adjusted revenue and achieve their goals. We offer the most comprehensive suite of risk and quality analytics solutions in the industry. Our diverse solutions can help health plans boost risk-adjusted revenue, improve quality ratings, and increase member and provider satisfaction through sustained engagement.

Our solutions help payers engage members based on their health status to facilitate early identification, documentation, and treatment of chronic illness.

We leverage advanced AI models and extensive data sets—including risk adjustment, quality, and socioeconomic data—to identify member gaps and create prospective and retrospective target lists.

Our member outreach solutions help close care gaps by providing live agents to help members schedule appointments. Targeted communication campaigns motivate your members to proactively manage their chronic conditions and make healthy behavioral changes.

Our quality analytics solutions provide data tracking and measurement tools to help calculate and monitor ratings while targeting areas for improvement. By identifying codes and qualifications which can impact HEDIS™⁶ measures and Stars ratings, our medical record retrieval and clinical abstraction solutions also support performance.

Our consulting services team also has the breadth and depth of expertise to help payers maximize their Medicare and Medicaid lines of business. Our customers include payers new to this unique market, as well as those with substantial experience.

<sup><sub>1. https://www.kff.org/coronavirus-covid-19/issue-brief/eligibility-for-aca-health-coverage-following-job-loss/
2. Change Healthcare internal customer data analysis. Results may vary based on the health plan and member demographics
3. UPMC assessment after utilizing Health Fidelity’s NLP-enabled coding platform
4. Health Fidelity
5. Change Healthcare internal customer data analysis. Results may vary based on the health plan and member demographics
6. HEDIS is a registered trademark of the National Committee for Quality Assurance (NCQA)</sub></sup>