Is FFS the Benchmark for Coding Accuracy?

Risk adjustment is taking some heat.

Approaches pursued by Medicare Advantage Organizations (MAOs) receive criticism voiced by several actors, not the least of which are in governmental oversight. One of the concerns voiced is that there is a significant difference in the amount of diagnostic codes associated with members of MA health plans in comparison with Medicare beneficiaries still in Original Medicare. So we need to be mindful of this point and ensure that we are on firm ground with our HCC coding as an industry lest we leave ourselves open to an unwelcome backlash

The way these issues are getting played out is reflected in several legal cases that have set precedents over recent years, as well as the latest spate of suits brought by the Department of Justice against Humana. When you look at these regulatory and legal activities, you will see several different actors on the part of the government. They include the regular CMS folks conducting national and targeted RADV audits, of course. Also, there is the OIG of HHS, now equipped with the ability to conduct their own RADV audits, independent of the regular CMS RADV audits. Then there is the Department of Justice pursuing actions along the lines of the False Claims Act.  We also have commentary and recommendations on the part of the General Accounting Office (GAO), citing “high error programs” for correction in areas of government that are targeted for “improper payment”, which they estimate to amount to 9.5% ($124 B) in Medicare Advantage Part C and another $2.1 B in Part D (projected for 2014 on 

These figures pronounced by the GAO are based on the assumption that Fee for Service is the benchmark by which Medicare Advantage can be gauged to be guilty of excessive coding, and hence, generating overpayment by the government. This argument we believe to be an erroneous assumption. It appears in a January 2012 GAO report to Congress regarding Medicare Advantage risk scoring (GAO-12-51). In this report, the GAO diligently attempted to normalize comparative populations in order to conduct an apple-to-apples comparison between Medicare Advantage and Original Medicare beneficiaries. However, our theory is that the claims for beneficiaries under the FFS Medicare program are actually under-coded for diagnostic accuracy and that health conditions of members of Medicare Advantage Organizations might be better described by the coding captured through their private health plans.

Our theory is based upon one simple but important factor. Under FFS payment procedures, the physicians’ offices are submitting CMS-1500 forms for processing payment through the Medicare carriers. Their payments are based off procedure codes, to which their billing staff and billing services pay significant attention. If the CPT or HCPC codes are not nearly perfect, the claims will reject. By comparison, however, the ICD-9 diagnostic codes associated with the claims are not rejected if they are not comprehensive and highly accurate, only if they are not minimally in agreement with the procedure codes. Thus all the attention and effort is placed on procedure code accuracy, not on diagnostic accuracy.

By contrast, when hospitals bill the Fiscal Intermediaries, their DRG payments are entirely keyed off the ICD-9 codes and, hence, the level of diagnostic code capture is robust and achieves high levels of data quality. But since there is no financial incentive for physicians to code their diagnoses so optimally, the theory is that they will not invest the effort or expense necessary to do so.

Indeed, it is common for a doctor’s office to maintain a short list of the most common diagnoses at the lowest level of specificity in order to streamline the doctor’s administrative efforts. There is no incremental payment for doing a better job on diagnostic coding and it falls by the wayside.

There are barriers to comprehensive code capture built into Fee for Service billing. The claim only provides information on a specific presenting complaint at the time of the encounter, not a sweep of all the concurrent conditions. There are opportunities in the annual wellness visit to do more comprehensive diagnosis capture, of course, but there is no real reason to go to that level of documentation under FFS, despite the request of the ICD-9 guidelines to do so. Further, many billing system limitations only allow at most four diagnostic codes per claim. In order to submit more codes, additional diagnoses must be gathered in future visits, which may or may not happen. In order to make up for this deficit, retrospective chart reviews are conducted by Medicare Advantage plans to file supplemental information, but there is no reason to do so under FFS.

In contrast, CMS risk adjustment guidance to MAOs, as stated in the 2006 manual: risk scores measure individual beneficiaries’ relative risk and risk scores are used to adjust payments for each beneficiary’s expected expenditures. It is not for the purpose of reimbursing a particular encounter today, but rather to project forward in time with the best information available. Additionally, MAOs are required to get these diagnoses submitted during every calendar year within a limited period of elapsed time. To my knowledge, no one ever asked providers to assist Medicare in its efforts to gather comprehensive and highly precise diagnoses to predict future expenditures under Original Medicare. But CMS requires this of MAOs using ICD-9 guidelines for coding appropriateness, and which are used along with medical charts to grade coding accuracy in RADV audits of MAOs.

If this theory has merit, the benchmark for diagnostic coding accuracy is not FFS Medicare but probably some place more like the Medicare Advantage levels. Simply put, the same Medicare beneficiary with objectively identical health conditions would be coded differently under the Original FFS Medicare program versus Medicare Advantage. 

Log on to Your Rise Account

Forgot your password?
Create an Account

Association Sponsors

Latest Posts

Keep M.E.A.T. on Your List for a Healthy Audit

By Jeanmarie Loria, Advize Health, LLC If you’re reading this article, chances are you already know what HCC Coding is – but we’ll give you a refresher anyway. Hierarchical Condition Category (HCC) and Risk Adjustment Coding is a CMS-mandated payment model. This model works to identify those with chronic and other serious illnesses and prescribes a risk factor score to each patient, taking into consideration their ailments and other demographics. With every payment model comes a specific set of audit and review requirements that must be met to maintain the integrity of the system, and this is where MEAT (Monitor, Evaluate, Assess/Address, Treat) comes in handy. In a face to face visit M.E.A.T. maybe found in the chief complaint, history of present illness, review of systems, physical exam, assessment and/or plan....
Read More

Getting It Right: True North in Healthcare Reform

The movement to repeal and replace "ObamaCare" created so much political noise that clear thinking has been hard to come by. The 2010 legislation that created the marketplace for individuals and small business (the Affordable Care Act or ACA), has almost evolved into a political Rorschach test. The more that politicized options and alternatives to repealing, replacing, or repairing it were discussed, the harder it was to put into focus the original problems the legislation was designed to address. Nevertheless, the rancorous divisions over what needs to happen to fix problems in the individual insurance market remain a distraction from the real issue at hand: the cost of healthcare weighing down the economy and what we need to do to fix it. With all the intense debates swirling around this topic, an impression emerges that “solving the ObamaCare issues” is something that must be accomplished as an isolated matter, discrete and independent of other problems. The heated debates concentrate on the mechanics and tactics required to solve the "uninsured problem", the "under-insured problem", and for some, the federal budget problems created by the subsidies for low-income enrollees in these plans. This single-issue mono-vision obscures a reality that must be addressed. This perspective completely misses the fact that something is going on that is far more corrosive to the wellbeing of all of us as consumers of health care, as taxpayers, and as a nation: something that overshadows the tug ‘o war over ObamaCare. The critical and overlooked issue is that health care expenditures in the U.S are at least twice as expensive as other nations, which consume so much of the national economy...
Read More

Upcoming Conference


Qualipalooza: The 2nd Annual RISE Quality Leadership Summit 

This unique event incorporates three conferences presented side-by-side: the Star Ratings Strategic Planning Forum, the HEDIS Forum, and the CAHPS, HOS & Member Survey Forum. Register for one conference for an in-depth examination of a single area, or design your own event by opting for the all-access pass and choosing the sessions from each conference which correspond exactly to your interests.


Upcoming Webinar

Successful and Meaningful Techniques for Integrating Risk and Quality Interventions

Quality measurement and risk adjustment regulations are increasing and the financial impact upon health plans is progressively driving accountability and influencing profitability through payments, penalties, and bonuses. To improve performance and optimize risk and quality payments, Health Plans need to streamline processes, employ best practices for data capture, and focus on strategic interventions that use a member-centric approach.  

Connect With Us

Copyright © 2014 Resource Initiative & Society for Education. All rights reserved.