Risk-Adjusted Reimbursement Déjà vu

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For most health information management (HIM) professionals, many aspects of risk-adjusted coding might give rise to the phenomenon, at least as it pertains to diagnosis-related groups (DRGs)!

The pandemonium regarding documentation coding payment changes brought about by DRGs in the 1980s was instrumental in raising awareness of the critical importance of HIM expertise. For many years, HIM professionals have been seeking improvement in clinical documentation in acute care to support the accuracy of coding and associated reimbursement, and they will continue to work throughout the continuum of care as champions of precise documentation and coding.

The Patient Protection and Affordable Care Act of 2010 (commonly referred to as the PPACA) included provisions intended to contain Medicare costs, grow revenues, improve delivery systems, and increase services. The PPACA was aimed at moving U.S. healthcare from a fee-for-service framework to fee-for-value, and it provided risk adjustment models for reimbursement. Risk adjustment is a statistical process that considers the underlying health status and spending of patients when examining their outcomes or costs. There are several types of risk adjustment models that are used to risk-adjust healthcare data. HIM professionals have been recognized as critical to the success of achieving great results for hierarchical condition categories (HCCs). HIM has also moved into the physician office to educate physicians on creating methods for physician inquiries to obtain specificity in clinical documentation; HIM professionals are continuing to serve as experts in coding requirements for HCCs, particularly for Medicare Advantage.

It has been an important movement for HIM to have been successful in raising awareness of the risk-adjusted factor (RAF) with their medical staffs and the need for implementing HCC coding auditing programs. The RAF is used as a mechanism to differentiate expected resource consumption for the healthy person, who rarely sees a physician, versus the person with multiple co-morbidities who requires complex management.

What’s next? Home health is next! The Centers for Medicare & Medicaid Services (CMS) is moving home health agencies away from a volume-based payment model, to a new value-based payment system called the Patient-Driven Groupings Model (PDGM). To be part of the Home Health Prospective Payment System (HHPPS), the PDGM  relies more heavily on clinical characteristics and other patient information to place home health periods of care into meaningful payment categories, and it eliminates the use of therapy service thresholds. PDGM focuses on patient needs and hinges more on patient characteristics in order to pay for home health services. CMS released final language for the PDGM last November, marking the sprawling home health payment overhaul that policy experts see as the biggest industry change in decades. PDGM has roots from the previously proposed Home Health Groupings Model, or HHGM, which CMS has described as focusing on value versus volume of care, better serving all individuals. PDGM ushers in new payment episode timings and removes therapy visits to determine payment. 

Just like HCCs, PDGM is another tremendous opportunity for the HIM professional, specifically because of ICD-10 expertise. ICD-10 codes are used to determine the ”clinical group.”There will be a 30-day period assigned to the clinical group based on the principal diagnosis code on the claim – hence the importance of HIM expertise in ICD-10 coding. The average resource use of all 30-day periods varies across clinical groups, and the payment will reflect those differences. If a diagnosis code is used that does not fall into a clinical group (e.g., dental codes or other uncovered/invalid codes), the claim will be returned to the provider for more definitive coding.

The biggest “wow” here is that the PDGM will take effect Jan. 1, 2020. In conjunction with the implementation of the PDGM, there will be a change in the unit of home health payment, going from a 60-day episode to a 30-day period.

Cassidy HHRG 040919.jpg

In conclusion, PDGM represents a great opportunity for HIM professionals to leverage their ICD-10 knowledge and expertise – and to once again provide their own personal value proposition to their organization. PDGM cannot be successfully implemented without you.

Figure 1

The Patient-Driven Groupings Model (PDGM) uses 30-day periods as a basis for payment. Figure 1 above provides an overview of how 30-day periods are categorized into 432 case-mix groups for the purposes of adjusting payment in the PDGM.

Source: https://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/2019-02-12-PDGM-Presentation.pdf

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