Book excerpt: Risk-adjustment models

By Laurie L. Prescott, MSN, RN, CCDS, CDIP, CRC, and Sharme Brodie, RN, CCDS

There are a number of risk-adjustment models used in healthcare which affect reimbursement as well as quality of care reporting metrics. Each model has its own nuances, but all employ ICD-10-CM diagnosis codes and the Official Guidelines for Coding and Reporting which governs use of the code set, and a number of risk-adjustment models are prescription based, related to the medications required to maintain a patient’s health status.

These methods assist in predicting costs to provide care for an individual patient or group of patients. These methods can also be used to predict or account for those patients who will likely develop complications such as readmissions or infections, for example. Medicare uses a risk-adjustment methodology of Hierarchical Condition Categories (CMS-HCCs) to predict the costs related to Medicare Advantage health plans, at the patient level, meaning that two patients within the same community could have different care costs depending on the amount of risk, or work, it takes to maintain the health of a patient. This methodology is also used to risk-adjust many quality monitors.

CMS-HCCs

In use since 2004, CMS-HCCs are one of the most readily identified risk-adjustment models. These hierar­chies are used to obtain a numeric code or risk-adjustment factor value for specific diagnoses.

Most risk-adjustment models incorporate demographic variables. The CMS-HCCs consid­ers five demographic factors, including:

• Age
• Gender
• Patient’s status related to disability (patients under the age of 65, eligible for Medicare benefits due to a disability)
• Original reason for entitlement (individuals over the age of 65, who qualified for Medicare due to a disability prior to the age of 65 years
• Low-income status (measured by whether the patient is also Medicaid eligible)

Documentation does not affect these demographic variables because these are usually collected during the patient's registration and/or enrollment period with CMS. Since the physician cannot influence the age and sex of the patient, the real effect that the physician has on the raw risk score is the detailed documentation of the patient’s health status. Providers need to thoroughly document in the patient’s history what disabilities and/or chronic conditions qualified the person for Medicare, when applicable, as that condition is likely to require ongoing monitoring and influence the patient’s risk-adjustment factor.

Editor’s note: This article is an excerpt from The Essential Guide to Supporting Quality Care Measures Through Documentation Improvement.