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Risk Adjustment

A Five-Part Series by Will Stabler

About This Series

I wrote this article series in five parts over two months during early 2017 when there was much discussion of what was termed “value-based care.” This series examines risk adjustment and the role it can play in such systems.

Articles in This Series

As America’s healthcare system transitions toward payment models that reward what many call value-based care, risk adjustment is playing an increasingly important role. For many health plans, it is an integral part of operations.
 
In this article I look at how risk was modeled in the Medicare Advantage program and by the ACA before diving into more advanced risk adjustment concepts.
 
Risk adjustment models and their reporting requirements continue to evolve. With this evolution, it becomes critical for us to appreciate how risk adjustment, quality and care management measures can work together for success.
 
In achieving accurate risk adjustment results there are two main issues where plans fall short: not properly identifying the illness burden of the population, and not closely monitoring and managing their data submissions.
 
In risk adjustment, variation can be the enemy. It can also provide opportunities if properly managed. The point of care is one place where we can do that.
 

Risk Adjustment: Part of a Necessary Holistic Approach to Healthcare Analytics

By Will Stabler

First published on Feb. 18, 2017

Many who study and work in risk adjustment are coming to an understanding of how risk adjustment fits in with many of the new realities of our healthcare system’s transformation to value-based care. As I have presented earlier, risk adjustment models and their reporting requirements continue to evolve. With this evolution, it becomes critical for us to appreciate how risk adjustment, quality and care management measures can work together for success.

Risk Adjustment a Central element of a holistic Approach to Healthcare Analytics

The Centers for Medicare and Medicaid Services (CMS) is placing increasing emphasis on technical solutions for healthcare quality and cost. As it does, risk adjustment promises to be a central element of an ever-advancing, holistic approach to healthcare analytics. That also means health plans and providers will need to come together more and more to take advantage of the power that lies in the data they collect and report. Such partnerships hold great promise for creating opportunities that encompass financial performance, streamlined operations, increased competitive advantage, and improvements in the quality of care.

For a moment, let’s tune out the random noise coming out of Washington around the Affordable Care Act and healthcare in general, and also move a little beyond the risk adjustment models I presented in the first two installments. Consider the Medicare Access and CHIP Reauthorization Act (MACRA), which just went into full swing at the beginning of the year, and its implications for risk adjustment and healthcare analytics. MACRA’s Quality Payment Program (QPP), consists of two tracks—the Merit-based Incentive Program (MIPS), and Advanced Alternative Payment Models (APMs).

As with all government regulations, there are a lot of acronyms to digest. Just remember that the MIPS and Advanced APM tracks for eligible providers are all about performance and outcomes. Those who decide to participate in an Advanced APM may earn an incentive payment for participating in an innovative payment model. Those who decide to participate in MIPS will earn a performance-based payment adjustment.

In the previous installment I stated that I believe the most effective Medicare Advantage Organization risk adjustment programs consist of a fully integrated risk adjustment and quality program, because it not only helps streamline collection processes for both HCC-related risk adjustment measures and Healthcare Effectiveness Data and Information Set (HEDIS) quality measures, it also sets the stage for more robust analytics that can cross strategic business lines. This is critical when we look at the MACRA QPP, whose payment adjustments start at plus or minus 4% percent in 2019 (2017 performance year) to plus or minus 9% in 2022.

 

Where are The Regulations Headed?

Sorry to have to go a little into the weeds here, but we need to look at what is already being required for participants this year. During 2017, eligible clinicians who choose to participate in the QPP should record quality data and how they used technology to support their practice. To potentially earn a positive payment adjustment beginning on Jan. 1, 2019 under the Merit-based Incentive Program (MIPS), they must send in data to MIPS about the care they provided and how their practices used technology in 2017 by the deadline of March 31, 2018. Those who are using an Advanced Alternative Payment Model (APM) will report through that model by the same date.

Eligible clinicians in MIPS who don’t send in any 2017 data will receive a negative 4% payment adjustment. Those who submit a minimum amount of 2017 data to Medicare can avoid a negative payment adjustment. Those who submit at least 90 days of 2017 data to Medicare may earn a neutral or small positive payment adjustment. If eligible clinicians send a full year of 2017 data to Medicare, they may earn a moderate positive payment adjustment. To be able to earn the incentive payment for participating in an Advanced APM, eligible clinicians send quality data through the Advanced APM. Those who participate in an Advanced APM in 2017 may earn a 5% incentive payment in 2019.

In 2017, eligible clinicians must report in the following three categories for MIPS:

  • Quality (60%)
  • Advancing Care Information (25%)
  • Clinical Improvement Activities (15%)

The fourth category—Cost—is not assessed in performance year 2017 but it will begin to be considered in 2018.

So for eligible providers, the MACRA QPP is all about demonstrating that they can control costs, improve healthcare quality, meaningfully use electronic health records and other healthcare IT in patient care, and improve and streamline clinical processes. This is on top of their other reporting responsibilities. For health plans, who need to acquire and report their own risk adjustment data, this increasing reporting burden for providers creates opportunities to cut across risk adjustment and quality processes, and foster greater provider engagement. If health plans can find ways to streamline collection and analysis of all of this data and relieve some of the reporting burdens of provider organizations along with their own, mutually beneficial healthcare analytics partnerships can be achieved.

Also consider something more sobering: A national survey released last fall of more than 17,000 physicians has found that many are unhappy, burned out and don’t have the time for the most important part of their jobs—their patients. A lot of them are so fed up they are talking about quitting clinical work and not recommending that family members join the profession.

The survey, released in late September and titled, “2016 Survey of America’s Physicians: Practice Patterns and Perspectives” was conducted on behalf of The Physicians Foundation by Merritt Hawkins. Among its findings were:

  • 54% of physicians rate their morale as somewhat or very negative.
  • Only 37% describe their feelings about the future of the medical profession as positive
  • 49% often or always experience feelings of burnout.
  • 49% would not recommend medicine as a career to their children.
  • Physicians spend 21% of their time on non-clinical paperwork, the equivalent of 168,000 physician FTEs not engaged in clinical activities.
  • Only 14% of physicians have the time they need to provide the highest standards of care.

These physicians cite regulatory and paperwork burdens and loss of clinical autonomy as the main sources of their dissatisfaction, and many specifically cite the ICD-10 system as a barrier to practice improvement. Just over 89 percent say that EHRs either have had little or no improvement in their patient interaction or have detracted from it.

The last thing our American healthcare system needs is to lose its next generation of physicians.

These factors are just some that have created the need for a holistic, team approach among payers and providers for adjusting risk, conducting prospective and retrospective review, complying with regulatory requirements and acquiring and managing data more efficiently. We collect a huge amount of information in healthcare, at different times of the year and in different settings. A lot of it is the same information, just looked at in different contexts from the needs of the person or entity collecting the information. We need to do a better job of managing how we do that.

In the next installment, I will present some of the shortcomings and successes of risk adjustment so we can look toward the future.