HOW A 360-DEGREE VIEW OF RISK ADJUSTMENT IMPACTS VALUE-BASED CARE

Over the past several years, a shift towards value-based care has begun in the US healthcare system. Within value-based care, incentives and policy structures exist to prevent risk selection, where insurers try to avoid enrolling high-risk members who may be costly to cover. Risk adjustment seeks to project and correct for costs incurred by health plans to treat members of varying risk levels.

The Centers for Medicare & Medicaid Services (CMS) first introduced risk adjustment with Medicare Advantage, which has been using CMS’s Hierarchical Condition Category (HCC) models to risk adjust since 2004. Medicare Advantage enrollment has been steadily growing and is expected to reach 22 million by 2020. With the move towards value-based care—fueled not only by the Patient Protection and Affordable Care Act (ACA), but also the Department of Health & Human Services’ (HHS)—a bold goal was made to have 90% of CMS payments linked to value-based care and 50% under APMs by 20181.   

Given this shift, risk-based payments have become more common. Today, risk adjustment also impacts Managed Medicaid plans, Qualified Health Plans under the ACA, Accountable Care Organizations, and provider groups that share risk with their health plan partners. With value-based model enrollment growth, risk adjustment is becoming increasingly important to a health plan’s success.

At the same time, market dynamics are putting pressure on the risk adjustment environment. Various trends in the MA space—for example, reduction in reimbursement rates, more stringent data submission requirements, and the expanded use of audits—further underscore the importance of revenue integrity and risk adjustment.

Effective risk adjustment can often be the difference between profitable growth and market exit. Part of the challenge with risk adjustment is that current processes are messy, making it difficult for organizations to capture the full risk adjustment opportunity. Even though the number of risk adjusted lives has grown more than ten-fold in the last decade, the processes that support risk adjustment continue to rely largely on people rather than scalable automation. Furthermore, many organizations currently view risk adjustment simply as a necessity—an administrative exercise—instead of as a strategic asset, and thus outsource much of these manual processes to vendors that staff inexpensive offshore labor. As a result, organizations are not operating with a full 360° view of risk adjustment.

 When 360° view of risk adjustment is brought into an organization’s overall long-term strategy, it can help drive top- and bottom-line growth. Successful 360° risk adjustment can also help health plan receive reimbursements commensurate to the costs of care required for treating its members, better design plan offerings that fits the needs of the market, and maintain the financial health of the organization. Learn more about 360-degree risk adjustment and how to get started.

111/02/17 Final Rule: Centers for Medicare & Medicaid Services (CMS), HHS

 

By Chuck Smolky, Vice President, Sales

chuck smolky

 


Tags: Risk adjustment, Medicare Advantage

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HOW A 360-DEGREE VIEW OF RISK ADJUSTMENT IMPACTS VALUE-BASED CARE

Over the past several years, a shift towards value-based care has begun in the US healthcare system. Within value-based care, incentives and policy structures exist to prevent risk selection, where insurers try to avoid enrolling high-risk members who may be costly to cover. Risk adjustment seeks to project and correct for costs incurred by health plans to treat members of varying risk levels. The Centers for Medicare & Medicaid Services (CMS) first introduced risk adjustment with Medicare Advantage, which has been using CMS’s Hierarchical Condition Category (HCC) models to risk adjust since 2004. Medicare Advantage enrollment has been steadily growing and is expected to reach 22 million by 2020. With the move towards value-based care—fueled not only by the Patient Protection and Affordable Care Act (ACA), but also the Department of Health & Human Services’ (HHS)—a bold goal was made to have 90% of CMS payments linked to value-based care and 50% under APMs by 20181. Given this shift, risk-based payments have become more common. Today, risk adjustment also impacts Managed Medicaid plans, Qualified Health Plans under the ACA, Accountable Care Organizations, and provider groups that share risk with their health plan partners. With value-based model enrollment growth, risk adjustment is becoming increasingly important to a health plan’s success. At the same time, market dynamics are putting pressure on the risk adjustment environment....
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