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Risk adjustment: Why improving coding accuracy matters more now

January 31, 2014

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Under the Patient Protection and Affordable Care Act, also known as Health Care Reform, the process of risk adjustment is being expanded to include commercial members in an individual or small group plan offered both on and off the Health Insurance Marketplace. This process currently exists for our Medicare Advantage HMO and PPO plans.

Under Health Care Reform, everyone has access to health insurance regardless of their health status. In order to try to create a system in which payers and their provider network are compensated for the risk associated with the members they treat (i.e., risk-adjusted payments), complete and accurate information of each individual's health status through claims and encounter data is critical.

Risk adjustment

This risk adjustment process uses demographics and illness burden (measured by diagnosis code information), to assign members' risk scores. It also requires proper documentation of conditions for each member/provider encounter to accurately assess risk scores. The overall objective is to stabilize risk and prevent adverse selection by insurers.

However, there are some key differences between the risk adjustment models used for commercial and Medicare Advantage members. The commercial model is designed to redistribute money from insurers with healthier patient populations to those that have a sicker patient population, and either the state or federal government is responsible for operating the commercial model. The Medicare model is set up to determine the payment to Medicare Advantage organizations and is operated by the federal government.

How does this impact my practice?

In risk adjustment, there is an increased dependence on accurate coding practices. By having precise coding, it will provide better insight on the true risk associated with members and allows for a more accurate projection of medical cost, enabling practices to obtain greater financial stability. It also allows practices to analyze and evaluate the effectiveness of care management programs, reduce practice variation, and help drive better quality outcomes for members.

Practices can use these steps to make sure they achieve the best results:

  • standardize the medical documentation and coding process consistent with billing procedures;
  • adopt electronic health records and other technologies that support greater coding accuracy and efficiencies;
  • engage office staff and coders to ensure the best coding practices are being used.

Support from IBC

IBC contracts with Inovalon, Inc., an independent company, to provide support services for risk adjustment. These services ensure that members with targeted diagnosis gaps are identified for follow-up care and that practices have access to the necessary tools to accurately capture and report diagnostic code information. Through Inovalon, the following programs are designed to help your practice attain the best results:

  • Personal Health Visits. Identified members are offered supplemental care management services such as Personal Health Visits at their home or other location where IBC has contracted for these services (i.e., Walgreens).
  • ePASS®. Providers can use the ePASS® system to ensure that diagnosis gaps for Medicare Advantage HMO and PPO members and certain commercial members are being reported back to IBC. Providers who submit information to ensure quality and consistent coding through ePASS® for Medicare Advantage HMO and PPO members and certain commercial members are eligible to receive a financial incentive.
  • Medical record review. An Inovalon representative will contact certain providers to determine the most appropriate method of retrieving medical charts for select members from your practice. Certified coders or nurse practitioners will either come on-site to providers' offices to retrieve the charts or providers may be asked to fax the charts to Inovalon. Providers will receive compensation for each medical chart retrieved. Integration with select electronic medical record systems is also available to provide greater efficiencies and to minimize provider disruption when obtaining necessary medical records.

If you have any questions regarding risk adjustment, please contact Customer Service at 1-800-ASK-BLUE.


This content was prepared for the Provider News Center and may not be reproduced in any way without the express written permission of Independence Blue Cross. Independence Blue Cross is an independent licensee of the Blue Cross and Blue Shield Association.
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