As the larger healthcare environment evolves at breakneck speed, it can be challenging to keep your organization current.

One direction in healthcare is the implementation of Risk Adjustment methodologies to predict current and future healthcare costs for individuals.

Understanding the importance of Risk Adjustment in today’s healthcare climate is necessary.

Everything you need to know about Risk Adjustment:

  1. What is Risk Adjustment?
  2. What is the goal of Risk Adjustment?
  3. What factors determine individual Risk Adjustment scores?
  4. How can Risk Adjustment Programs help healthcare organizations?

What is Risk Adjustment?

Risk Adjustment is a statistical methodology developed by the Centers for Medicare and Medicaid (CMS). A person’s health status, existing conditions, and demographic factors are converted to a number referred to as your risk score.

A person’s risk score can help predict current and future healthcare costs. Health plans, for example, offset the “risk” of insuring members with high healthcare usage by also insuring members with lower anticipated healthcare costs (the “adjustment”).

As insurers move towards a Risk Adjustment-only operational model, this is especially pertinent to medical coding businesses.

Most medical coders and coding professionals are familiar with FFS (fee-for-service) payment models, in which insurers pay providers based on services and/or procedures performed.

Risk Adjustment, however, is designed to help insurers recoup payment by closely managing the health-related needs of its members based on diagnoses, treatments, and demographic factors.

What is the goal of Risk Adjustment?

The goal of Risk Adjustment related to healthcare businesses is very simple: to help predict the insured’s current and future healthcare costs and therefore mitigate expensive, unforeseen charges for both patients and providers.

Studies show that risk adjustment models implemented in healthcare organizations can help to save millions of dollars on unnecessary treatments, reduce hospital admissions, minimize inaccurate code assignment, and capture costly diagnoses.

This methodology can help providers and healthcare businesses get a clear and holistic view of the patient population, thus helping to define business goals and the welfare of their larger patient populations.

What factors determine individual Risk Adjustment scores?

Governmental agencies, including The Department of Health and Human Services (HHS) and the Center for Medicaid and Medicare Services (CMS), determine the scoring system and which factors can be used in conjunction with which diagnoses to determine an individual’s Risk Adjustment Score. Additionally, variable demographic information is used when calculating Risk Adjustment Scores. Some of these additional factors include:

  • Age
  • Gender
  • Past medical history
  • Disability status
  • Medicaid status
  • Geographic location or region
  • Medicare entitlement
  • Documented acute, stable, and chronic conditions

How can Risk Adjustment Programs help healthcare organizations?

Implementing a Risk Adjustment program within your healthcare business allows an opportunity for an almost immediate return on investment. In essence, medical care’s “human element” can leave substantial funds on the table. Harmony Healthcare’s consultants are experts at Risk Adjustment and working with leadership and providers in implementing such programs. From planning to implementation, Harmony’s roadmap to Risk Adjustment will help your institution to avoid the most common roadblocks organizations run into when attempting implementation.

If you are interested in executing a Risk Adjustment program, reach out to the experts at Harmony for a turnkey solution tailored to your needs.

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