Despite its long history in Medicare Advantage and healthcare at large, Risk Adjustment remains a challenge for health plans. Our recent interviews with ten senior leaders in Risk Adjustment have shed light on the pressing challenges facing the industry today. The insights from CEOs, VPs, Directors, and leaders in the Provider community, spanning both large and small health plans, highlight various challenges. These range from provider education and data integration to adapting to regulatory and program changes.

The Top 5 Challenges

The leaders we interviewed highlighted five areas that significantly impact risk adjustment.

1. Provider Documentation and Education

Plans are confronting a fundamental issue: the disconnect between providers and the nuances of Risk Adjustment coding. Echoing the sentiments of industry leaders, one executive transparently stated, "Let's be honest, you have to pay the providers." This reality anchors the need for well-structured incentive systems to align provider efforts with Risk Adjustment goals.

Such incentive systems are crucial not only for improving the accuracy of documentation but also for capturing providers' attention, particularly when provider groups are naturally inclined to prioritize those plans which serve a larger percentage of their patient population or those in which they have ownership stakes. Despite these efforts, the recurrent hurdles of annually documenting chronic conditions, ceasing to report resolved conditions, and achieving the apex of coding specificity persist.

2. Obtaining Medical Record Data

Health plans rely on various data streams such as claims, encounters, and medical records to collect diagnosis data. But as one industry expert puts it, "We still live in a manual world, where we send Techs to get charts." This statement highlights the reality that, despite technological advances and varying levels of direct access to Electronic Medical Records (EMRs), ranging from 20% to 60%, the integration of disparate EMR systems remains a major obstacle for health plans. Timely data access continues to be an arduous task, often necessitating costly incentives to overcome the technological barriers that stand between health plans and the comprehensive risk adjustment data they need.

Navigating access to medical record data poses significant challenges, particularly for smaller health plans and those in competitive markets. Leaders in risk adjustment have raised concerns about slow progress and administrative roadblocks EMR integration initiatives, suspecting these may be driven by anti-competitive practices. This is especially prevalent in scenarios where access to provider records is hindered by competing health plans having ownership stakes in provider systems. Highlighting this issue, a health plan leader plans to meet with state-level oversight officials next week, seeking a solution to these access barriers.

3. Focus on Accurate Diagnoses

Every plan representative we interviewed emphasized their dedication to reducing inaccurate diagnoses and reducing Risk Adjustment audit risk, which highlights the industry's response to the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of the Inspector General (HHS-OIG) directives for improved coding practices. This commitment is reiterated by one leader's colorful statement, "We don't play in the gray...I don't look good in orange."

Despite their diligence, plans perceive that CMS and HHS-OIG view the Risk Adjustment payment system as being intentionally abused. They urge CMS and HHS-OIG to acknowledge the near impossibility of completely eradicating provider coding errors, given the vast number of annual claims and diagnoses. Plans recommend overhauling the current Risk Adjustment Data Validation Audits approach to address these challenges or, at least, seek greater transparency and insights from CMS audits amidst stringent reporting standards.

4. Recruiting Knowledgeable Employees

The scarcity of specialized Risk Adjustment expertise in the job market presents a significant challenge for health plans. Training new hires in this niche area is not only time-consuming but also daunting, as one industry expert described, "The best [educational] resources are the CMS website and the Customer Service and Support Center (CSSC) operations - but that is like wading into the ocean." This metaphor vividly captures the overwhelming nature of the available resources, which, while extensive, lack the centralization and accessibility needed for efficient learning. Consequently, many health plans find themselves dependent on vendors for this deep-seated knowledge, underscoring the pressing need for more streamlined educational pathways in Risk Adjustment.

5. Constantly Changing Models and Processes

Over the past decade, CMS's continual changes in Risk Adjustment models, submission processes, and oversight policies have created significant operational challenges for health plans. With the 2024 introduction of the new CMS-HCC model (V28), concerns have intensified. A plan leader noted that "The CMS model changes in V28 did not incorporate input from the plans and providers," suggesting a primary focus on reducing "discretionary coding variation ". This absence of collaborative input in V28's development raises questions about its ability to accurately reflect patient risk profiles.

Strategies and Solutions

To combat these challenges, plans are taking proactive steps:

  • Targeting High-Risk Codes Leveraging HHS-OIG's high-risk diagnosis codes, plans are auditing providers to identify and correct unsupported diagnoses.
  • Enhancing Data Integration Aiming for real-time EMR data access, plans are pushing for federal action similar to the provider information blocking rules to improve accessibility.
  • Intensifying Training Programs Recognizing the steep learning curve, plans are developing focused training modules for essential monitoring and reporting tasks.
  • Employing Point Solutions To assist physicians with coding, plans are deploying EMR-based solutions to improve accuracy at the Point of Care including medical record review and risk scoring before claim submission.
  • Seeking Regulatory Understanding There is a call for CMS to better understand the daily limitations faced by plans, hoping for regulations and oversight that consider the operational realities and reduce the administrative burden of Risk Adjustment Data Validation instead of mere process updates .

The Way Forward

The industry's plea is clear: Risk Adjustment needs to evolve. The insights from these Risk Adjustment leaders underline the need for strategic collaboration between healthcare providers, plans, and regulatory bodies. By addressing the identified pain points with targeted interventions and by embracing modern data strategies, the path ahead can lead to more accurate, fair, and effective Risk Adjustment processes. As the healthcare landscape evolves, so must the tools and methodologies at its core, ensuring that patient care and plan sustainability are in constant alignment.