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Risk Adjustment The First No-Regret Move
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For Provider Organizations: Risk Adjustment is a No Regret Move
As provider organizations approach the tipping point on “Real Risk”, a focus on risk adjustment coding is
clearly a winning strategy
The Shift to “Real Risk”
It is clear that our progress on a path toward adoption
of value-based contracting and away from pure fee-
for-service payment models is accelerating. Several
industry groups have been examining this trend, and
the cascading effects it has on how care is provided.
With CMS leading the way, commercial payers are
setting aggressive goals for shifting from volume- to
value-based payments 1 . A Leavitt Partners survey
indicates that the percentage of revenue derived from
value-based arrangements is expected by physicians
to grow from 29 - 45 percent over the next few years2.
Most Commercial Payers including Cigna, Aetna
have already set goals of moving 50 percent or
more of their provider contracts to “value-based”
payments.3
This is putting increasing pressure on providers to
adapt care delivery and operational models. Providers
are finding themselves juggling a myriad of value-
based-care contract types, all of which require (in
addition to new care models) the gathering and
reporting of large quantities of data to present a
rounded view of their patient population.
So far the adoption of value-based contracting has
been limited. Although the number of ACOs is
growing, their scope is still limited. And, other “value-
based” payments are focused on limited bonuses tied
to quality metrics and cost that don’t put providers as
organizations at real risk. However – we are
approaching the tipping point. Provider organizations
are reaching an inflection point for a shift toward “Real
Risk”, which we consider to be true risk contracts with
significant exposure to upside/downside risk or
population (capitated) payment models, with over
30% of their revenue impacted by such contracts.
1https://assets.kpmg.com/content/dam/kpmg/pdf/2016/06/co-hc-3-
change-is-local-a-market-level-analysis-of-healthcare-emerging-value-economy.pdf
2 Ibid
Medicare Leads the Pack
Medicare is in the lead in pushing providers down the
path toward risk – Medicare Advantage, Medicare
Shared Savings, and now the Medicare Part B
MACRA/MIPS rollout which incents a move to
alternative payment models. Providers with 20% or
more of their payer mix revenue from Medicare are
now approaching the moment of truth for real risk
where they need to take action or see considerable
declines in their revenue. Even for those who haven’t
yet determined what types of future risk contracts to
enter, there are near-team “No Regret” moves that
can be made to prepare for assuming risk (of any kind)
while supporting existing revenue from fee-for-service
contracts.
Easier Said Than Done
While preparing to assume risk is conceptually simple,
implementing effective value-based care processes is
much harder in practice. Many providers are ill-
equipped to assume real risk at present, mainly
because performing successfully under real risk
contracts involves the setup of new/revised
operational processes and technology that feed upon
and reinforce each other to create an ecosystem for
value-based care. Population health technology,
practice management and EMR systems, patient visit
design, risk management, and quality tracking all have
a vital part to play (and interplay) in supporting value-
based-care.
It is natural for provider organizations to invest in
clinical integration and data integration, and to track
population health metrics. However, that alone is not
enough. Single-lever solutions only partially address
the providers’ needs. This can be difficult to quantify
3 http://healthaffairs.org/blog/2017/06/28/growth-of-acos-and-alternative-payment-models-in-2017/
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since most providers do not yet have the means to understand the financial impact of real risk contracts and identify
all the correct levers to optimize them. A systematic review of each practice’s processes and risk profile can be used
to create a roadmap toward integration of all the aspects of value-based care into every practice – and here’s the
key – in a manner that is non-disruptive to the practice itself.
The Commonwealth Health Approach
We believe provider organizations should take a pragmatic approach that is focused on developing a quick, clear
understanding of their situation and develop a playbook that defines a set of immediate clear ‘no regrets’ actions.
While unique to each provider practice, there are a set of common elements to draw from when creating the
purpose-built playbook. They include:
Prioritizing actions by financial
impact now and in the future
• Examine practice and provider readiness
• Map financial drivers to specific transformation programs
Plan practice operations
transformation
• Make select adjustments to patient visit and practice workflow
• Prioritize roll-out of new programs
Leverage enabling
technologies
• Limit technologies to those needed to support transformation
• Keep focused on data stewardship
Extend the practice with
support services
• Implement centralized services to provide coordination, support to patients
• Integrate home based services for disconnected patients
Some questions provider organizations should be considering are …
• What is the landscape and future trajectory of risk contracts?
• Is the organization prepared to win in value-based contracts?
• Which programs and contract types should we enter?
• Are there actions we can take that minimize provider disruption but unlock future value?
• Are there actions that support FFS now AND position for increasing value-based contracts?
• How can we be better positioned?
The answers will inform a comprehensive risk strategy, and help create a practical plan of action.
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No Regret Move: Risk Adjustment
So what steps can providers take in advance (or in early days) of the shift which will reap rewards quickly and create
early wins in the very first risk contracts? Generally, one of the first moves is a focus on risk adjustment – the accurate
and complete documentation of a beneficiary’s health. This focus will smooth the transition from volume-based care
to value-based care. Risk adjustment lends itself to relatively seamless integration (see Fig. 1) into existing fee-for-
service practice processes, and actually enhances FFS revenue, while equipping the practice with the tools and
knowledge capital necessary for assuming real risk.
Figure 1
A risk adjustment program anchored on Annual Wellness Visits offers providers a relatively simple opportunity to
adopt these new processes into their practice while enhancing their fee-for-service revenue. Generating more
Annual Wellness Visits (AWVs), which are reimbursable under fee-for-service contracts, also generates a font of
data about the provider’s patient base to establish accurate disease profiles in preparation for assuming risk. Seems
easy… not exactly. Many providers have made a push for AWVs and results have fallen short. Plus, even the best
in-office AWV programs still miss at least 15% of the targeted population.
So what’s the trick? A comprehensive plan to incorporate risk adjustment efforts into existing practice workflow
requires some technology investment, some changes to practice operations, and the integration of certified coding
resources. The good news: this can be done without disruption to existing practice patterns and with minimal
changes to the provider-patient workflow.
Of course, the more complete and more accurate documentation of coding data, inherent in a well-managed risk
adjustment program, improves quality documentation and related measures. On top of that, it can also enhance
accurate billing under existing FFS contracts. When deployed comprehensively, a program offers a chance to
repatriate “Disconnected Patients”, bringing them back under the provider organization’s active care. And finally,
risk adjustment capabilities yield value under a whole slew of risk contracts, real or otherwise (see Fig.2).
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Figure 2
Conclusion
Risk is here to stay, and the time for sitting on the sidelines is in the past. As providers prepare themselves for
assuming risk, the ones who take early steps to prepare through a series of “No Regret” moves will be the winners
in the new world of value-based care. The secret lies in proactively assessing the readiness of the provider practice
and mapping the path to success. We can help.
Commonwealth Health Advisors–VBC
Advising Providers on how to win in Value-Based Care
Commonwealth Health Advisors–VBC has extensive knowledge and experience in the area of provider-based risk
adjustment coding. We are an advisory practice that supports provider organizations in the analysis of, assumption
of, and operational execution to win in value-based reimbursement models.
To learn more, contact us or visit us at www.cwhadvisors.com.
WORKS CITED:
Muhlestein D., Saunders R., McClellan M., “Growth Of ACOs And Alternative Payment Models In 2017” Health Affairs Blog, June 28, 2017 http://healthaffairs.org/blog/2017/06/28/growth-of-acos-and-alternative-payment-models-in-2017 KPMG and Leavitt Partners, “Change is Local: A Market Level Analysis of Healthcare’s Emerging Value Economy” 2016 https://assets.kpmg.com/content/dam/kpmg/pdf/2016/06/co-hc-3-change-is-local-a-market-level-analysis-of-healthcare-emerging-value-economy.pdf