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    Three ways to draw competitive advantage from risk adjustment


    For most payers, risk adjustment is viewed as a necessity, not as a strategic lever from which one draws competitive advantage. Yet as a means for risk-bearing organizations to improve operationally, clinically, and financially, risk adjustment has enormous potential.

    Related: Opinion: 4 ways to improve the ACA risk-adjustment model

    To be sure, the expertise and effort needed to accurately capture risk is significant. Viewing it only as a burden, however, is short-sighted. Risk adjustment has a number of strategic advantages. It can drive more accurate premiums, ensuring that plans are priced accordingly and profitability is not jeopardized. It enables plans to better design plan offerings that best fit the needs of the market. It provides a valuable snapshot of population health that can be used to direct care delivery and improve quality ratings. Most importantly, it ensures that plans receive reimbursements commensurate to the costs of care required for its members.

    Getting the most out of the risk adjustment process requires perspective, organizational will, and the resolve to share information across departments and disciplines. Here are three tips that can help any health plan leverage its risk adjustment efforts:

    #1. Take a holistic approach. It’s easy to think about prospective and retrospective risk adjustment as two separate activities. Prospective risk adjustment uses historical claims data to predict and communicate gaps in care, assessment, and disease documentation to providers. Retrospective risk adjustment, in contrast, uses the medical records generated from physician-patient encounters to identify documented diagnoses that have not yet been coded.

    While prospective and retrospective risk adjustments are different, they are two sides of the same coin. For maximum benefit, their efforts should be coordinated. As an example, plans can use retrospective review to follow up on members with conditions that were suspected, but not confirmed, during the prospective risk adjustment process. This will ensure that no diagnoses slip through the cracks.

    Another benefit to a holistic mindset is that it encourages decisions that will improve care and information gathering over the long haul. Incentivizing providers to document and code more accurately reduces the need for administratively burdensome medical record review; similarly, it may make more sense to incentivize providers so that they, instead of payers, bear the burden of making sure patients show up for tests or follow-up exams.

    #2. Align your organization. Beyond financial benefits, other synergies can accrue from risk management given proper alignment. Most obvious alignment is between risk adjustment and HEDIS measures. Both utilize a similar process to identify gaps, prioritize opportunities, and communicate those opportunities to providers. Both departments may use incentive programs for physicians to close gaps, and both require retrieval of medical records to report on the closure of such gaps.

    To realize these potential synergies, first ensure that charts retrieved in the risk adjustment process are utilized in other departments, and vice versa. In the long run, chart retrieval prioritization should take into account all areas of needs so that resources are spent for the betterment of the entire organization instead of a single department. Physician engagement and education, as well as member outreach and evaluations, can also be coordinated to improve both risk adjustment performance and HEDIS measures. This level of alignment will also decrease administrative costs and physician abrasion.

    Next: Adapt your processes



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