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Blog   |   1.11.17

Top 5 Questions Facing Risk Adjustment in 2017

Person silhouette standing in 2017 on the hill at sunset

From the looks of it, 2017 will be a big year for risk adjustment. There is a new administration in power in Washington, which will have far-reaching implications for the entire healthcare industry. And the risk adjustment space specifically will have to look inward, as it manages the currents of technological change and pries itself away from outdated, manual workflows. With these factors in mind, here are our top five questions facing risk adjustment in 2017.

Will CMS move forward with broader RADV audits?

In late 2015, CMS proposed expanding the risk adjustment audit program to cover all Medicare Advantage (MA) plans, every year (with either a condition-specific or comprehensive audit). This is because they believed that mistakes in the diagnosis data that MA organizations submit to CMS led to a drastic misallocation of resources–some plans are overpaid for their patients, and some are underpaid. CMS currently audits only five percent of MA plans each year, so moving to a system where all plans are audited would not only be a significant policy change.

In 2017, how will CMS move forward with broader RADV audits? Will CMS build more infrastructure for the Medicare Advantage Recovery Audit Contractor program (a new flavor of RADV)? Will the agency start extrapolating any penalties it finds in a sample population to plans’ entire MA cohort?

What happens to risk adjustment on the Commercial exchange?

While it’s an open question if, when, and how the Affordable Care Act (ACA) will be repealed and replaced, its future will hold important consequences for risk adjustment.

Risk adjustment is a key ingredient in how the  ACA’s health care exchanges are managed. Along with reinsurance and risk corridors, risk adjustment (‘the three Rs’) ensures fair treatment for insurers and patients in an environment where pre-existing conditions are not taken into consideration. Should the ACA be repealed in part or whole, the exchanges would likely also suffer. Organizations could pull out of the exchanges or patient subsidies could shift or go away, thus altering the exchange population.

Now there are plenty of scenarios that could happen here. If access is expanded in other ways to compensate for ACA repeal (for example, through Medicare Advantage expansion) risk adjustment could actually become a stronger force within healthcare. But as of now, who knows?

What happens to the chart retrieval process?

As it stands, chart retrieval for risk adjustment is conducted in a completely backward way. Often, electronic charts are printed out, then scanned onto hard drives, then transported or transmitted to a coding vendor. The entire point of electronic records was that they would be more easily transmitted than this.

There are signs that this might change in 2017. Vendors (full transparency, Apixio is one of them) are figuring out ways to get charts directly from electronic medical records, without the runaround for paper charts. Risk adjusting organizations are understanding the benefits of direction extraction too; it offers less abrasion for providers and is cheaper and faster for payers.

Still, patient chart retrieval is one of the most delicate balances in healthcare and many different stakeholders (office managers, doctors, RA directors) have to change the way they work to execute direct EMR extraction. It’s going to take a big effort to do this— but 2017 may be the year where technology can help get us to the utopia that Meaningful Use had intended.

How are readmissions risk adjusted via 21st Century Cures?

The recently-passed 21st Century Cures Act mandates that hospital readmission penalties must be risk adjusted. Currently, hospitals are penalized if patients are readmitted for the same illness within 30 days of discharge. Hospitals have complained that this penalty is applied unfairly, because very sick patients will be readmitted regardless of how good their original treatment is. This is a promising change, but the legislation included very few details about how readmissions risk adjustment would work. In 2017, the government is expected to outline the readjustment formula they will use to adjust the penalty. This will then be a new space for the risk adjustment industry to address.

By the end of 2017, will the majority of risk adjustment be done with technology-augmented coding?

Last year was a turning point for technology in the risk adjustment industry. Phrases like “machine learning” and “natural language processing” started cropping up at even the oldest of manual coding vendors. Given the increased rhetoric around technology in this space, will 2017 be the watershed moment when the majority of insurance plans and health systems move to a  technology-augmented coding solution? A notable event to watch here is the RISE Tennessee conference in March, where the industry’s leading plans, systems, and vendors gather.

There’s lots coming on the horizon, but no matter what plays out in 2017,  risk adjustment stakeholders have to be prepared.

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