Risk Adjustment –
The Balanced Budget Act (BBA) of 1997 mandated risk adjustment payment methodology for the Medicare + Choice program (now the Medicare Advantage program) to increase payment accuracy. Risk adjustment strengthens the Medicare program by ensuring that accurate payments are made to Medicare Advantage (MA) organizations based on the health status of their enrolled beneficiaries. Accurate payments to MA organizations help ensure that providers are paid appropriately for the services they provide to MA beneficiaries.

In 2003, the Centers for Medicare and Medicaid Services – Hierarchical Condition Category (CMS-HCC) model was finalized as the risk adjustment payment model. The CMS-HCC models function by categorizing International Classification of Diseases, 9th Edition, Clinical Modification (ICD-9-CM) codes into disease groups called Hierarchical Condition Categories (HCCs). Each HCC includes diagnosis codes that are related clinically and have similar cost implications.

The risk adjustment payment model relies on the ICD-9-CM diagnosis codes to prospectively reimburse MA organizations based on the health status of their enrolled beneficiaries. Diagnosis codes drive the risk scores, which drive risk adjusted reimbursement. As a result, physicians and providers must focus attention on complete and accurate diagnosis reporting according to the official ICD-9-CM coding guidelines (i.e., coding diagnoses accurately and to the highest level of specificity).

Risk Adjustment Data Validation – To ensure risk adjustment payment integrity and accuracy, CMS selects Medicare Advantage Organizations for risk adjustment data validation (RADV). RADV occurs after the final risk adjustment data submission deadline for the MA contract year. The primary objectives of CMS initiated RADV are to:

• Verify enrollee CMS-HCCs (Hierarchical Condition Categories) used for payment.
• Identify risk adjustment discrepancies.
• Calculate enrollee-level payment error.
• Estimate national and contract-level payment errors.
• Implement contract-level payment adjustments.

CMS utilizes medical record review for data validation. As a result, if we are selected for CMS initiated risk adjustment data validation, we will be requesting hospital inpatient, hospital outpatient, and/or physician provider medical records, as indicated. The medical record request will be in writing with detailed instructions. Upon receipt of the medical records, to validate data, the medical record reviewer specifically checks for the following:

• All diagnoses submitted for payment (i.e., used for HCCs) are:
• Documented in a medical record that was based on a face-to-face health encounter (with the exception of pathology services) between a patient and a healthcare provider.
• Coded to the highest level of specificity and in accordance with the ICD-9-CM Guidelines for Coding and Reporting.
• Assigned based on dates of service within the data collection period.
• From an acceptable risk adjustment provider type and risk adjustment physician specialty.
• The notes are dated and the provider of service is appropriately identified on the medical records via their signature and provider/physician specialty credentials.

Proper medical record documentation is the key to accurate payment and successful data validation. If, during a CMS initiated data validation process, CMS identifies risk adjustment discrepancies and/or confirms the medical record documentation does not support a reported diagnosis, financial adjustments will be imposed on the MA organization and the discrepancies will contribute to the payment error estimate.

(References: CMS IOM, 100-16, chap. 8; CMS 2008 Risk Adjustment Data Technical Assistance Participant Guide).

Internal Data Validation -
As stated above, risk adjustment data validation (RADV) is a process to ensure risk adjusted payment integrity and accuracy. As a Medicare Advantage Organization, BCBSTX is responsible for validating the diagnoses submitted on Blue Medicare PPO claims. We have chosen to conduct data validation activities independent of CMS' efforts. Our internal validation team will conduct the validation activities, which will include sample identification, medical record request and review of medical records. As a result, BCBSTX will be requesting medical records for some Blue Medicare PPO patients. All requests for medical records will be in writing with detailed instructions. It will be apparent in the request whether or not the data validation activities were initiated by CMS or our internal validation team.

During medical record review, we will check for the same validation items as CMS (listed above).

We would like to thank you in advance for your valuable time and appreciate your cooperation in our efforts to ensure risk adjustment payment integrity and accuracy.

If you have any questions about this process, please contact your local Network Management office.

posted 12/2008