The power of 3: Fully optimized risk adjustment

The healthcare industry is in the midst of a monumental shift towards value-based care, driven in part by the CMS mandate for provider groups to embrace downside risk by 2025. To navigate this shift successfully, provider groups, pay-viders and ACOs must develop robust coding programs with a strong understanding of all 3 risk adjustment methods. 

This guide explores what retrospective, prospective and concurrent risk adjustment are and how you can incorporate each to create an optimized risk adjustment program.

Retrospective risk adjustment is a tried-and-true method that many Medicare Advantage programs have relied on for years. As the name implies, retrospective risk adjustment involves looking back at a patient’s medical history to identify and code their conditions.

Advantages:

• Historical insights: Retrospective coding shines when it comes to identifying historical Hierarchical Condition Category (HCC) codes supported by a patient’s medical record. It digs deep into a patient’s medical history, providing a comprehensive view of their health conditions.
• Familiarity: Healthcare providers are accustomed to this approach, and many Medicare Advantage programs have successfully employed it for some time.

Limitations:

• Long-standing issues: One interesting aspect of retrospective coding is its tendency to uncover long-standing clinical documentation issues. These issues may have persisted for some time and may be challenging to resolve. While this isn’t a drawback per se — fixing issues is always a good idea, after all — you should be aware that these fixes may require time and effort.
• Claim submission: Additionally, retrospective risk adjustment often requires a secondary process to flag and send corrected HCC coding information to the payer. This process is relatively straightforward for Medicare Advantage programs but can be cumbersome for ACOs and Comprehensive Primary Care Plus (CPC+) programs.

Prospective risk adjustment takes a forward-looking approach, aiming to predict a patient’s risk score at the start of the year.

Advantages:

• Proactive care: Prospective risk adjustment encourages a proactive approach to healthcare by predicting risk scores at the outset. This may enable physicians to address conditions early, and early interventions often lead to better outcomes for patients.
• Financial predictability: Prospective coding enhances financial predictability for healthcare organizations. It allows for better budgeting and resource allocation based on expected risk scores at the beginning of the year.

Limitations:

• Changing health status: Prospective coding may not account for changes in a patient’s health throughout the year, as it’s based on the initial assessment. To be effective, it relies on the accuracy and timeliness of patient data.

Concurrent risk adjustment offers contemporaneous monitoring of a patient’s health conditions and risk scores as new information becomes available.

Advantages:

• Real-time accuracy: Coders review the Electronic Health Record (EHR), medical notes and HCC codes before claims are submitted, delivering accurate coding that aligns with clinical documentation.
• Reduced need for retrospective reviews: This method reduces the need for time-consuming retrospective reviews and corrections, since coding issues are addressed as they arise.

Limitations:

• Labor-intensive: Concurrent coding is labor-intensive, requiring coders to review claims, which can be resource intensive.
• Works best when used with other forms of risk adjustment: Concurrent risk adjustment works best when combined with both prospective and retrospective approaches to facilitate comprehensive risk adjustment.