From Paul M. Katz v1 20161027
MIPS: What is CMS risk adjusting?
Beginning in 2017, physicians and other providers under MIPS, the CMS Merit-based Incentive Payment System, will have their future Medicare reimbursement adjusted in part by what CMS calls Resource Use Measures. These measures look at the global (Medicare Parts A and B) cost of services (resources) used for the patients attributed to the physician, and compare the resources used on a risk-adjusted basis to norms determined by CMS. Examples of Resource Use Measures include Total Per Capita Cost, Medicare Spending Per Beneficiary, and new Episode of Care measures, most of which are specific to patients with identified conditions (for example, Ischemic Stroke or Osteoporosis) and specific services (for example, Coronary Artery Bypass Graft, Pacemaker, Hip Replacement/Repair). Physicians are being evaluated on the total cost associated with their patients, not just the costs that are directly attributed to a specific provider for these patients.
How CMS risk adjusts
CMS utilizes two risk-adjusting methodologies for the Resource Use Measures. Both methodologies require an aggregation of all of the diagnosis codes reported in each year for each CMS beneficiary on paid medical claims. First, Hierarchical Condition Categories (HCCs) have been used to risk adjust the premiums paid for the Medicare Advantage Program as well as the annual budgets for each Medicare Shared Savings ACO and the Total Per Capita Cost measure. Second, Health and Human Services (HHS) and CMS have recently introduced an Episode of Care Group system as the new and likely preferred methodology to risk adjust, with a growing set of disease and service-specific measures that will be incorporated into the Resource Use Domain.
How HCC’s work
Medicare assigns weights to each of the approximately 80 HCCs. There are a finite number of diagnosis codes that map to an HCC, and those codes that are used only map to one HCC, while a patient can have multiple HCCs. Two examples of HCCs are “HCC 019 – Diabetes without complications,” and “HCC 111 – COPD.” Each patient’s Risk Adjusting Factor or RAF is the sum of all of his or her attributed HCC weights plus a demographic weight, with a few exceptions. The 2016 risk factor for HCC – 019 is 0.119 and for HCC – 111 it is 0.346. The demographic factor for a 70-year-old woman who is not disabled, not in end-stage renal disease, and not in Medicaid is 0.368. The 70-year-old woman with no HCCs would have 0.368 as her RAF score. With diabetes, her RAF score is 32% higher at 0.487 (0.368 + 0.119) and the same woman with diabetes and COPD would have a RAF score 126% higher at 0.833 (0.368 + 0.119 + 0.346). As a guide to risk adjusting, a provider could consider that each 0.1 addition to a RAF score adds approximately 5% to an average Medicare patients’ insurance premium, Resource Use budget, or acuity score.
HCCs can only be attributed to a patient if one of the mapped diagnosis codes was coded on a medical claim/encounter for the Medicare beneficiary during the measurement year. Billing the annual Medicare Wellness Visit each year offers a great opportunity to code all relevant diagnosis codes per patient at least once per year. Individual practices should adopt cheat sheets of the common conditions they see in their practice, and which diagnosis codes map to the relevant HCCs for those conditions.
How Episodes of Care work
While HHS and CMS’ Episodes of Care Groups are new, there are similar systems that have been in use for almost 20 years and are considered to be superior to other risk-adjusting systems, including HCCs. In Episodes of Care, medical claims related to a specific clinical condition and its continuation over time are accumulated into a case. Patients can have multiple episode cases at the same time. Two examples of the Medicare episode types are Coronary Artery Bypass Graft (CABG) and Heart Failure-Acute Exacerbation. All of the various Episode of Care systems work by evaluating each patient’s longitudinal claims record (consolidated from all medical claims across all providers and facilities) for diagnosis and service codes indicating the start of an episode, the continuation of the episode over time, and the conclusion of the episode. If physicians fail to report pertinent diagnosis codes, they can inadvertently shorten the continuation period of an episode, and reduce claim costs that should be part of an episode. Unfortunately, missing diagnosis codes on medical claims are a major problem in Medicare, where patients are often seen and treated for multiple conditions at the same physician encounter.