The importance of complete coding by physicians

Dr. Marcia Naveh of Matrix Medical Management has a very readable article on the issues surrounding Medicare Risk Management in the January, 2008 issue of Managed Care magazine.

At the end of the day, it all comes down to regular, complete, and specific diagnostic coding by the physician.

Medicare Advantage in 2007

CMS has released a wealth of information about Medicare Advantage in 2007:
http://www.cms.hhs.gov/MCRAdvPartDEnrolData/Downloads/MedicareAdvantageIn2007.zip

This 10.4 MByte zip file contains

• MA Backgrounder (Word document, 4 pages)
• MA Payment Type by State (PowerPoint presentation, 52 slides)
• MA Penetration by State (PowerPoint, 52 slides)
• Medicare Advantage in 2007 (Word, 15 pages)
• State Summary Sheets (Word, 53 pages)

There are also press releases in Word format (one per state) in a folder named Documents and Settings, each talking about the potential in-state effects of cuts to the MA program.

Worth a look.

Why Does My RAF Change?

To answer that question, let’s back up a bit.

CMS publishes the CMS-HCC risk-adjustment model they use to calculate the Risk Adjustment Factor (RAF) of each member in your plan. Every month, they provide you with the results of that calculation in the Monthly Membership Report (MMR) for your plan. What’s more, they provide all the information you need to verify their calculation in the corresponding Part C Risk Adjustment Model Output Report (or MOR, for short). In other words, the RAF calculation is designed to be audited by you, to ensure that CMS isn’t making mistakes in calculation, and hence, payment.

If you look at the model, you will see that individual RAFs are affected by age (as well as gender, but this doesn’t usually change), their status (e.g. newly enrolled, disabled, institutionalized, ESRD), and their diagnoses.

BUT…
CMS fixes the “risk-adjustment” age for a member for the entire year (based on their age as of February 1 of that year). So, birthdays don’t cause a change in a member’s RAF.

AND…
Even though you add to member diagnostic information by submitting RAPS files on a daily, weekly, or monthly basis, CMS only makes RAF changes based on this information twice a year:

• January 1, for ICD-9s submitted to RAPS by the preceding September
• July 1, for ICD-9s submitted to RAPS by the preceding March

SO, unless your member’s status changes (e.g. they become institutionalized), you will only see individual RAF scores change in January and July.

There’s one other wrinkle. When a member “ages in” to Medicare, they receive a “new enrollee” factor. For example, a 65-year-old man aging in to Medicare in 2007 receives a default RAF of 0.543, which may not reflect the actual risk he represents.

What this all means is that when your plan’s average RAF changes from month to month, you are seeing the effects of three things:

• Additional diagnostic information from claims or retrospective review (January and July only)
• New enrollees (typically dropping your average RAF)
• Changes in member status

The best way to get a handle on changes to your average RAF is by analyzing your monthly MMR file to understand how much each of these factors is affecting it.

As always, we welcome your questions about risk adjustment for Medicare Advantage plans.

(everything we know about RAFs comes from the most-recent Regional Training Participant's Guide)

We've Moved!

Due to the success of our product and service offerings (requiring that we hire more Leprechauns), we've moved into larger offices at

Leprechaun, LLC
6000 Western Place, Suite 900
Fort Worth, TX 76107

The phone number (817-231-7000) and fax (817-231-7099) remain the same.

(this is also my excuse for not posting for the past two months)

PCPs and P4P

Although it's not directly related to Medicare Advantage and risk adjustment, this article from the New England Journal of Medicine, Care Patterns in Medicare and Their Implications for Pay for Performance, underlines the importance of primary care physicians.

Two assumptions underpin the implementation of pay for performance in Medicare: that with the use of claims data, patients can be assigned to a physician or to a practice that will have primary responsibility for their care, and that a
meaningful fraction of the care physicians deliver is for patients for whom they
have primary responsibility.

At Leprechaun, we assign particular important to PCP charts when looking for documentation of patient risk factors, and PCPs are a key factor in a successful prospective HCC management program.

Budget Neutrality and Medicare Advantage Risk Management

Generally, the phrase budget neutrality (BN) means that a change to a government program (such as Medicare Advantage) should cost the same as the program without the change. In the case of Medicare Advantage, it means that risk-adjusted MA should cost the same as demographic-based MA. To quote CMS from the 2007 Rate Announcement (PDF):

[In 2007] As in prior years, the BN factor was calculated as the difference between the calculation of payments to plans using 100 percent demographic
payments and the calculation of payments to plans using 100 percent risk
adjustment payments, expressed as a percent of risk adjusted payments.
(page 15)

For CY 2007, the full BN factor is 7.1%, meaning that 100% demographic-based payment would have been 7.1% greater than payments under 100% risk-adjustment.

In 2003 – 2006, CMS would apply 100% of the BN factor to the risk-adjusted portion of payments (which was being phased in), effectively increasing the payments to MA plans. BUT…the BN factor is being phased out between 2006 and 2010, as follows

2006........... 100 %
2007............. 55 %
2008............. 40 %
2009............. 25 %
2010.............. 5 %

This phase-out means that 7.1% difference for 2007 is multiplied by 55% (.55) to arrive at a 2007 BN factor of 3.9%. Historically, BN factors have been much higher:

In 2005, the BN factor was 8.65% (applied to 50% of payment, as risk-based payment phased in)
In 2006, the BN factor was 13.05% (applied to 75% of payment)
In 2007, the BN factor is 3.9%t (applied to 100% of payment)

Here’s what that means:

Let’s say that last year (2006), 100% demographic-based payment to your plan would have been X. The BN factor of 13.05% tells us that you would have been paid 1.1305X under 100% risk-adjustment. Due to the phase-in of risk-adjustment, you got 25% of X (.25X), and 75% of 1.1305X (.848X), for a total of 1.098X in 2006..

Assume that nothing changes. This year, 100% demographic payment to your plan is again X, and the BN factor tells us that you would have been paid 1.071X under 100% risk-adjustment, except that 45% of that 7.1% has been phased out this year. So this year, you get 100% (no more 75/25 split – risk-adjustment is fully phased-in this year) of 1.039X for 2007.

That means, all things being equal, your plan would see a decrease in 2007 payments of about 5.4% based on changes to budget neutrality (from 1.098X to 1.039X), as a result of both a lower BN factor and the phase-out of its contribution. Of course, there are other factors that influence (and increase) X from year to year, but the impact of budget neutrality is yet another challenge to your plan’s finances. And since the BN factor is based on the difference between risk-adjustment and demographics, comprehensive HCC-based risk management programs are more and more critical to every MA plan’s future.

Additional information:

BN factors for 2008 will be announced on April 2, 2007 (they can’t be announced sooner, as they depend on the 2008 US Budget).

2007 Rate Fact Sheet: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/factsheet2007.pdf

2008 Advance Notice: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2008.pdf

Current and historical rate information here: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/AD/list.asp#TopOfPage

Physician Quality Report Initiative (PQRI) update

CMS Posts Information on the Physician Quality Reporting Initiative is a thorough post on the current status pf PQRI from Michael Apolskis's excellent Medicare Update blog.

For Medicare Advantage (MA) plans, the good news/bad news is that PQRI (use of G-codes to provide information to CMS about quality of care) is limited to Medicare Fee-For-Service (FFS). Good news because the negative impact of G-codes (using up the typically-limited number of ICD-9s which accompany a claim for information which does not affect MA risk adjustment scores) doesn't apply. Bad news because MA plans won't get information about quality of care, which is contrary to the one of the basic notions of health maintenance organizations.

If you're involved with Medicare, I recommend you subscribe to Medicare Update.

If you're interested in PQRI, please visit the CMS PQRI Web page.

One Percent

Can your plan get by on a one percent increase in payments? According to CMS,

Assuming that plans’ risk scores in 2007 are approximately the same as in 2006, we expect plan payments will increase, on average, by approximately
1.1%.

This is why risk management, in the form of retrospective and prospective programs to correctly assess the risk scores of your membership, is a key strategic determinant of your plan's future success.

(The rest of the linked-to CMS document is worth reading as well.)

Medicare Advantage Payments Demystified

One element of Medicare Risk Management success is simply understanding the timetable.

During the first half of each year (January through June) payments from CMS to your plan are an estimate, based on your member's risk adjustment scores from data submitted by the previous September, covering dates of service for 12 months ending the previous June.

Example: your January, 2007 payment was based on risk adjustment scores from data submitted by September 1, 2006 (the previous September) covering dates of service from July 1, 2005 through June 30, 2006 (the previous June).

On July first each year, you begin receiving the "correct" payment for the current year, based on dates of service in the previous year. At that time (actually in August), you also receive a payment to correct what you should have been paid in January through June.

Example: your July, 2007 payment will be based on risk information from dates of service between January 1, 2006 and December 31, 2006, submitted by March 2, 2007 (about 2 weeks from now).

If you are paid X dollars per month from January through June as an estimate, and the correct monthly payment to your plan is Y (based on the prior year's dates of service), you will be paid 6X (January through June), plus 6Y (July through December) plus a check for 6(Y-X) in August, which all adds up to 12Y (or 12 months of the "correct" monthly amount) over the course of the year.

Note that 6(Y-X) can be negative, which means you have to pay money back to CMS.

Finally, you can submit codes for 2006 dates of service (affecting payment in 2007) up until January 31, 2008. If the correct monthly payment to your plan should have been Z (based on these additional ICD-9 codes), then in September of 2008 you will receive a check for 12(Z - Y), representing the amount your plan was underpaid.

Note again that 12(Z-Y) can also be negative, indicating an overpayment by CMS.

If this all seems like old news, congratulations - you have a good basic understanding of Medicare Advantage payment methodology!

Your HCC Risk Management Personality Test

Assume, for a moment, you run a 20,000 member health plan. There are two options for you to manage HCC-based risk adjustment:

Option 1: you spend $480,000 on retrospective chart review for 2006 dates of service, and recover $6 million ($30 pmpm). Net recovery is $5.52 million

Option 2: you spend $1.2 million on retrospective chart review for 2006 dates of service, and recover $15 million ($63 pmpm). Net recovery is $13.80 million.

Which do you pick: cost or net recovery?

Your answer says a lot about which HCC management outsourcing solution you will be most comfortable with.

Paul Krugman on Medicare Advantage

Paul Krugman has written a column about Medicare Advantage, entitled First, Do Less Harm (accessed here via TruthOut, since Kugman's columns are behind the "paywall" at The New York Times Online).

[Once] Medicare ...started adjusting payments to reflect beneficiaries' health, the H.M.O.'s began dropping out: their extra layer of bureaucracy meant that they had higher costs than traditional Medicare and couldn't compete on a financially fair basis.

Regardless of how you feel about the political debate regarding Medicare payments, your Medicare Advantage plan must deal with the reality of risk-based payments in 2007.

3 "Can't Miss" Risk Adjustment Deadlines for 2007

With the new year upon us, it’s time to look ahead at CMS deadlines that will affect your Medicare Advantage plan during the coming year.

Your final opportunity to submit Risk Adjustment Payment System (RAPS) information regarding 2005 dates of service is January 31, 2007. This information will be used to correctly adjust payments made to your plan during 2006 based on the risk profile of your membership (75 percent of 2006 payments comes from 2005 risk adjustment data about your members). Don’t forget to make a final RAPS submission for 2005 dates of service before the end of the month, as it’s your last opportunity to do so.

You’ve already seen your 2007 payments in your MMR for January. These 100-percent-risk-adjusted payments were set based on dates of service between 7/1/2005 and 6/30/2006, so it's too late to fix them. The next payment adjustment will take place on 7/1/2007, based on dates of service from 1/1/2006 – 12/31/2006 and submitted by March 2, 2007.

Finally, your initial payment in 2008 will be determined by risk-adjustment information submitted by September 7, 2007. Being aware of these dates ensures your plan receives correct payment as soon as possible, rather than waiting for a final retrospective payment. More than ever, plan management requires a clear understanding of the cash flow implications of RAPS.

I want my NPI

In case it slipped your mind, May 23rd is the deadline for providers to begin using their 10-digit National Provider Identifier (NPI), as mandated by HIPAA back in 1996.

The idea is that instead of providers having a different identification number for every plan they interact with, providers would have a single number used by all plans (and Medicare):

The purpose of the National Provider Identifier (NPI) is to uniquely identify a health care provider in standard transactions... The compliance date for all covered entities except small health plans is May 23, 2007; the compliance date for small health plans [under $5 million in receipts] is May 23, 2008. As of the compliance dates, the NPI will be the only health care provider identifier that can be used for identification purposes in standard transactions by covered entities.

CMS has a very complete Web page on NPI along with lots of Q&A.

Do you know where each of your providers stands with regard to obtaining and using their NPI? There's only 137 days left until the deadline!

Happy New Year!

From all of us at Leprechaun, we wish you and your plan great success in 2007.

Your First Look at Payments for 2007

Today, December 22, CMS will deliver your Monthly Membership Report (MMR) for January. What makes this MMR of special interest? It’s your first look at member payments under 100% risk adjustment (last year, payments still included a demographic component of 25 percent). If your plan has been doing a good job of HCC-based risk management over the past 12 months, then your MMR for January 2007 should contain few surprises. Congratulations!

Not so happy with your January MMR results? Then it’s time to take a closer look at ensuring your members are completely and accurately coded for risk, both retrospectively for 2006 dates of service, and prospectively for 2007. Plans which are not actively focused on the risk profile of their membership during 2007 face an uphill battle against the rising cost of care. Moreover, plans which do nothing will see their risk adjustment scores (and payments) decline.

Current Leprechaun clients are seeing incremental revenue increases between $40 and $80 PMPM as a result of Leprechaun’s expertise in managing HCC-based risk adjustment for Medicare Advantage plans.

Medicare Clarifies Data Submission Requirements

On December 6th, Medicare announced two important clarifications regarding data submissions to RAPS:

1. Submission of risk adjustment production files must submit at least once every calendar quarter; and
2. Reduction of duplicate risk adjustment submissions must adhere to no more than five percent (5%) per file. We define a duplicate submission as a diagnosis cluster with the same attributes as that already stored in the RAPS database; duplicate submissions result in 502 errors.

We've seen plans that don't stay current with their RAPS submissions, and it's an operational red flag. The 5% allowance for 502 errors means that you have to know what you have already submitted. Again, CMS is forcing plans to clean up their data processing act.

If call this is Greek to your ears, please give me a call (1-888-LEPMED1, ask for Mike Duffy), and I'll be happy to clarify what it means. Existing Leprechaun clients should know that we are aware of these changes and will comply.

Bart Starr is Old Enough for Medicare

In fact, he's not only a Medicare Advantage plan member, but UnitedHealth Group has selected Bart and Cherry Starr as spokespersons for their MA plan.

Obviously, announcements like these show that plans are in the heat of enrollment season, and draw attention to the recent press release (PDF) from the Centers for Medicare and Medicaid stating

CMS has received complaints concerning inappropriate marketing activities performed by sales agents...CMS is closely monitoring and tracking complaints related to the activities of sales agents and has begun taking corrective actions as necessary.

It's a shame that this sort thing happens in the name of taking care of older Americans. Please make sure that your plan is doing the right thing.

Thanks to Gorman Health Group's excellent newsletter (free!) for the information on CMS.

For Leprechaun Clients Only!

You are cordially invited to participate in Leprechaun’s HCC Physician Online courses. We have designed eleven (11) unique courses for:

1. Cardiology
2. Critical Care Medicine
3. Endocrinology
4. Gastroenterology
5. General Surgery
6. Geriatrics
7. Hematology-Oncology
8. Infectious Disease
9. Nephrology
10. Primary Care
11. Pulmonary Medicine

The Leprechaun Risk Adjustment Course for Physicians is a web based tool that:

1. Teaches physicians the basics of HCC Risk Adjustment
2. Introduces physicians to coding challenges specific to their specialties
3. Shows physicians their own historical coding patterns and compares them to those of their regional peers
4. Tests physicians’ understanding of the material and allows them to obtain continuing education credit after passing an examination

Each course provides a test to ensure a physician's undertanding of CMS risk adjustment and the importance of complete and correct coding in that system. The course is certified for one hour of continuing medical education (CEU). We suggest all primary care providers and high volume specialists take this course.

Remember, if it helps to change only one coding habit, it will pay for the program many times over.

For more information please contact your Leprechaun account manager.

Not Your Father's Medicare Advantage Plan

This article describes how one Medicare Advantage plan (HealthSpring) is using more pleasant office settings to differentiate themselves from other plans in the market.

Interestingly, the plan uses both high-tech electronic medical records (EMR) for providers and low-tech 3-ring binders for patients as part of its approach to "to track prescriptions and stay on top of chronic health problems".

The article closes with some specifics about the financial difference of properly coding for risk adjustment. Worth a read.

Busy Busy Busy

Open enrollment for Medicare plans kicked off on the 15th of this month, and most plans are preoccupied with marketing their product offerings.

Unfortunately, it's a bad time to take your eye off of your risk management program:

• Starting January 1st 2007, your revenues will be based 100 percent on the risk adjusted status of your members. Sadly, the time has long passed to impact your initial 2007 payments.
• January 31st is the deadline to submit RAPS data relevant to 2005 dates of service.
• In February you should begin your review of 2006 data for retrospective adjustment.
• March 2nd is the deadline for updating your members risk adjustment score for payments beginning July 1st 2007.

Medicare Advantage (MA) programs face a nearly continuous stream of important deadlines. Missing deadlines can mean the permanent loss of revenue (in the case of missing the deadline for 2005 dates of service) or a delay in receiving proper compensation based on the risk represented in your membership (in the case of missing a payment-adjustment deadline).

So, even though new members are important, if you don't have a good handle on risk adjustment, those new members could be digging you a deeper hole than the one you may be standing in. Good prospective and retrospective risk management techniques are the only answer to a financially healthy MA plan.

RAPS Submission Timetable

I'm always looking for one of these:




You can always find the current one here: http://www.csscoperations.com/new/rapformat/newraps.html

(along with other useful information about CMS's Risk Adjustment Payment System (RAPS), like record layouts, error codes, and the various files).

Check out Everything RAPS! in the Links section of the right sidebar!

Whither Managed Medicare?

This article, Managed Healthcare Revitalized, from Managed Care magazine had this excellent graphic (click the image for a larger version):



Of course, not everyone is convinced about the long-term prospects for managed Medicare:

The question is what happens when real risk adjustment cuts in. Then we’ll see if Medicare Advantage can sustain itself and innovate in terms of improving care delivery at a lower cost.

We agree that many plans will get a surprise in January when they see just what 100% risk adjusted payment means to their revenues.

How Are Hospitals Like Airplanes?

In the larger sense of risk-management, this NY Times article on having pilots training hospital teams on accident avoidance is a worthwhile read (free NY Times online registration required to read the article).

A growing number of health care providers are trying to learn from aviation accidents and, more specifically, from what the airlines have done to prevent them. In the last five years, several major hospitals have hired professional pilots to train their critical-care staff members on how to apply aviation safety principles to their work.

At the end of the day, it's all about delivering the best possible care to plan members.

TriZetto Acquires Plan Data Management

Payer-focused information technology provider TriZetto today announced a definitive agreement to acquire Plan Data Management (PDM) in a move designed to "bolster its Medicare Advantage solutions."

Like Leprechaun, PDM sells a product in the Medicare risk management arena. Unlike Leprechaun's product offerings, PDM does not focus solely on HCC management for Medicare Advantage plans, and relies on reports sent "...back to the provider [to] determine if there are other diagnoses that should have been coded/included."

Nevertheless, we're glad to see this important strategic challenge for Medicare Advantage plans getting increased visibility as a result of this planned acquisition, and congratulate Steve Jackson and his team at PDM on their good fortune (Steve and our associate John Gorman of Gorman Health Group recently shared a stage at the second Medicare Risk-Adjustment Seminar presented by Financial Research Associates).

Prospective Activities for Your MA Plan

The real key to HCC management for Medicare Advantage plans is to completely and accurately code patients from the outset.

While it's possible to do retrospective recovery up to 13 months after the close of a calendar year, your plan must wait up to 18 months to see payments that they might otherwise have seen within 6 months (assuming CMS gets the checks out on time, an issue they are currently dealing with). Delaying cash flow by 12 months is not a good idea for any business.

In turn, the key to prompt coding is provider education. Do your providers have an understanding of the entire HCC risk-adjustment process? If not, they may not be doing complete and accurate coding of their patients. Most providers still code based on pre-2004 ideas (i.e. based on the treatment delivered during an encounter, not the patient's overall health status).

In addition, there are at least two activities which your plan needs to perform on a prospective basis:

1. New members should be seen as soon as possible - a new member represents an unknown risk profile for your plan.
2. Each of your members should be seen at least annually. This is because every January 1st, CMS conveniently forgets that a patient has, for example, an amputation or other diagnostic status.

Prospective activities are not hard to manage if you have the proper tools for your provider relations, member relations, or providers to use. Leprechaun provides both physician education and prospective management tools for its clients.