FAQ’s on Risk Adjustment

FAQ’s on Risk Adjustment


Risk adjustment is a new payment methodology that is prospective in nature; meaning that instead of paying for costs after services are rendered, we are estimating costs in future years based on what we know to be true of the patient in the recent and current years. This article will cover the basics of risk adjustment, where to find good information, and some challenges in the field.

I am also going to give you the inside scoop of how the AAPC CRC® credential got started, and how it is evolving.

FAQ #1: Isn’t risk adjustment just like Fee-For-Service, except focusing on diagnosis codes instead of CPT® codes?

Answer: Risk adjustment cannot be compared to Fee-For-Service rules because the qualifications of diagnosis submission are not the same. In the FFS world, diagnoses typically have been submitted when they have “MEAT” associated with them. MEAT is an acronym for Monitor, Evaluate, Assess, or Treat. The concept of MEAT only applies to FFS rules when choosing an E/M level of service. One cannot bump up a level of service because of additional diagnoses unless the diagnoses were addressed in that visit. Although this is true when discerning between a 99213 vs. 99214 or 99215, ICD guidelines have always instructed coders to code for all coexisting comorbidities, and especially those that were a part of medical decision making. There is no rule from ICD that a diagnosis has to be treated to be coded; but, we cannot allow diagnoses not addressed or treated to influence selection of E/M services.

FAQ #2: Why did it take so long for a CRC®, or why was that credential even made?

Answer: I personally spoke with the AAPC years ago about the need in the industry for a credential or platform for risk adjustment coders. I was not alone: others had even pitched a curriculum or program. Many of these were ideas around an “HCC credential;” but, keep in mind that we have never had a credential based on a singular payment methodology, and HCC is very specific. What should have been pitched was a curriculum that included all forms of risk adjustment with its purpose and reasoning (which includes population health management), instead of focusing on payments. The credential was eventually made because of a high request from coders and risk adjustment professionals, nationally.

FAQ #3: What is the difference in the CRC® developed in 2015 and the new full curriculum?

Answer: The curriculum developed in 2015 was created as a response for coders who already had a basic coding credential. That curriculum focused on risk adjustment only, and did not cover basics such as the business of medicine, anatomy and physiology, ICD coding guidelines in full, etc. Risk adjustment was in full swing for Medicaid and Medicare plans, but the risk adjustment model for Health & Human Services (HHS) was still being developed. The newer CRC® curriculum in 2016 is designed for new coders, as a stand-alone credential that includes those basics the previous version did not have. It also includes new information for the HHS model, as well as yearly updates to the others. Risk adjustment models change every year.

FAQ #4: How can I best prepare for the CRC® exam, and who made this exam?

Answer: The CRC® exam committee was randomly selected by AAPC using various risk adjustment professionals across the country. The questions posed were based on what a medical coder should know in order to properly code for risk adjustment work. This includes basics of risk adjustment, proper ICD code selections, knowing how to handle differing documentation challenges, and portions related to risk adjustment such as predictive modeling, quality, and basic financial ties of risk adjustment in healthcare. To best prepare for any AAPC exam, it would be most advisable to take the AAPC course. Be weary of “generic” and “homegrown” courses. While some of these might have some good information, an AAPC exam will include information conveyed in an AAPC course. PMCC instructors may teach those courses for which they carry a credential, so it is advisable to seek an instructor who is approved by AAPC.

FAQ #5: Why are there differing instructions for coding for risk adjustment, and which instructions are correct?

Answer: There are differing instructions for various reasons. Sometimes, organizations feel more comfortable only allowing diagnoses that were managed or addressed in the encounter. Although there have been RADV (Risk Adjustment Data Validation) audits by CMS that have approved all current diagnoses, there have also been OIG audits that used auditors who have not been trained in risk adjustment and have applied FFS rules to risk adjustment audits.

The correct methodology for risk adjustment coding is to code for all current diagnoses. The diagnosis does not need to be treated, managed, or addressed, it merely has to be an ongoing chronic condition noted by the treating provider or part of medical decision making. For example: “I had to consider the patient has Diabetes when treating this other condition,” or “I had to consider this patient has cancer, even though I am not personally treating the cancer myself,” etc.

The purpose of collecting all current diagnoses for each year is to account for the correct financial needs of those patients in the following year. Leaving out factual diagnoses harms the health plans—and ultimately the patients—when these diagnoses are not reported. That said, some organizations prefer a conservative methodology and insist the diagnosis be treated. The idea is that if a patient really has a condition, then it surely will be addressed at some point in a calendar year in a face-to-face visit. Keep in mind that this is not necessarily true for “status of” codes and other conditions that are persistent and known but are not regularly treated.

FAQ #6: How do I handle lists found in documentation such as a PMH Only list?

Answer: The problem with lists in record documentation is that there are so many variations and this can change provider by provider in the same office. CMS knows that providers can make mistakes—such as mixing both old and current diagnosis in a list titled PMH only, or entering old conditions under a header of Active or Current problems—and because of this clinical documentation can be challenging to code properly.

I created a new acronym, TAMPER, to be used for lists, in general. This acronym is officially trademarked through the United States Patent and Trademark Office by ionHealthcare®. The purpose of TAMPER is not to be a competitor for the previous mentioned MEAT acronym. Instead, this acronym was made for coders evaluating various lists, such as PMH, Active, Current, Ongoing, etc.

TAMPER stands for Treatment, Assessment, Monitor or Medicate, Plan, Evaluate, or Referral. Note that when medications are used to support a diagnosis as being current, it is important that the medication list is current and that the medication is used to treat only that condition, and for no other purpose. If the coder feels uncertain about a diagnosis presented in a list, they can easily apply the TAMPER acronym by asking themselves, “Did the provider tamper with the diagnosis?” If the answer is yes, then it may be coded from the list as a current diagnosis.

TAMPER™ Decision Flow:


FAQ #7: Can you tell me more about job opportunities and the cycle of risk adjustment work?

Answer: There are many risk adjustment vendors and organizations across the country and overseas. Many of these hire remote, work-from-home coders. Some pay coders by the hour, and others by the chart. Some of these are good 1099 contractor opportunities where coders can work from home without worrying about business insurance, obtaining clients/contracts, IT issues etc. and can focus on their coding craft. Regardless of the vendor, all risk adjustment activities occur at the same time, every year. Typically, risk adjustment chart review is completed in June through the following January of each year for CMS, and typically run all year long for commercial risk adjustment review activities. In risk adjustment all organizations are busy at the same time. Whenever there are lulls in work, there are industry-wide lulls.

FAQ #8: What exactly is a RADV and what are the differences of CMS RADV and HHS RADV?

Answer: RADV stands for Risk Adjustment Data Validation. There are two main types of RADV for CMS.

Random CMS RADV’s are performed using a random selection process where a Medicare Advantage plan is randomly selected for an audit.

Targeted CMS RADV’s are applied to Medicare Advantage plans who have raised red flags, such as a large increases in risk scores, etc.

Both of these CMS RADV’s use a “stratified sample,” taking a random sample of 1/3 of patients with high risk scores, 1/3 of patients with medium risk scores, and 1/3 of low risk scores. The focus is not proving the ICD code, but instead proving the validity of the HCC value that was paid to the health plan by CMS for the reported ICD. Any ICD supporting the HCC (or higher HCC value) is acceptable.

The HHS RADV is similar to the CMS RADV, but stratifies its sampling among adult, child, and infant patients and by the various metal levels offered through the ACA commercial health plans.

CMS RADV allows any face-to-face encounter that supports the HCC value in any DOS within the calendar year. HHS RADV requires the face-to-face encounter be reported through the claims EDGE server. They have recently also stated they will allow for non-EDGE claims as well as long as the encounter meets all of the same criteria of a face to face encounter.

CMS RADV is typically performed on data from three years prior, and the HHS RADV is performed on the year prior.

CMS RADV affects payments made to the health plan and may require a reimbursement to CMS, while HHS affects allowable funding for each health plan based on each health plans reported conditions, with those health plans having lower-cost patients (by risk/HCC value) possibly having to pay back into the system to cover those health plans with higher-cost patients (by risk/HCC value).

FAQ #9: Why do some companies offshore coding in risk adjustment?

Answer: Some organizations will not offshore this coding work because it is derived from U.S. government-based programs. Organizations who do offshore usually do this because coding services are less costly than in the United States. HIPAA does not apply overseas. Anyone considering offshoring this work should be sure to include all requirements of HIPAA in their contractual agreements, and perform a mock breach process to ensure the ability to track disclosures and medical record security.

Some organizations market that they are “approved by HIPAA,” but there is no such designation. They may have had a third party assess their security; but ultimately, the responsibility of record security is the covered entity.

Some US-based companies have only administrative offices onshore, and offshore the actual work. Several coding companies based in other countries that are specific to risk adjustment and only focus on marketing risk adjustment coding services. US-based companies can vary, as well. Some specialize in medical record retrieval, some in analytics, and others in population health management. Very few specialize primarily in coding.

FAQ #10: What are some of the important changes to risk adjustment with ICD-10-CM?

Answer: Recall that risk adjustment models change each calendar year (January-December); while ICD codes change each October 1st. Coders need to take care when assigning codes and understand that there may be new codes issued in October that may not yet have been added to risk adjustment models.

Most conditions that risk adjust are those that are chronic, life-long illnesses. ICD-10-CM includes many new combination codes that may best describe two or more conditions when concurrently present in a DOS. There was a CMS HCC model change in preparation for ICD-10, and this newer model took into account these combination codes and their respective values. HHS has based its model on the CMS model, but also includes diagnoses commonly found in young people. The HHS model does not currently have a Part D portion, as CMS does, but there are plans to move in this direction on the commercial risk adjustment side.