Validate Coding Data with CDIPs in Medicare Risk Adjustment

Polish your coding knowledge and skills.

By Carol Olson, CPC, CPC-H, CPC-I, CEMC, CCS, CCS-P

Clinical documentation improvement plans (CDIPs) are a hot topic for 2009. CDIPs are a collaborative process among providers and coders to bridge the gap between the data contained in the medical record and what is necessary for complete and proper coding.

Documentation quality is vital to nearly every aspect of health care; and, accurate chart documentation and diagnosis reporting now determines reimbursement for the Centers for Medicare & Medicaid Services’ (CMS) Medicare Advantage (MA) plans under the risk adjustment program. (If you aren’t familiar with Medicare’s risk adjustment program, please see the accompanying sidebar “What is Medicare Risk Adjustment?”)

CMS conducts medical record reviews to validate and ensure the accuracy and integrity of the risk adjustment data submitted by the MA plan for payments. Every MA organization may be randomly selected, or targeted, to participate in the medical record review. To be prepared, you should assume that, sooner or later, CMS will audit your medical records, and potentially your program.

The risk adjustment data validation process verifies that diagnosis codes submitted for payment by the MA organization are supported by medical record documentation for an enrollee.

Recent CMS validation findings indicated coded conditions were not supported in approximately 30 percent of the records reviewed.

Come Up With a Plan

Developing a CDIP requires you to take specific steps to improve your documentation and coding performance. The following four points will get you started.

1. Understand Clinical Documentation

Currently, MA health plans are reimbursed based on beneficiaries’ chronic conditions. Submitting an inaccurate diagnosis, or a diagnosis resulting in a different hierarchical condition category (HCC), is a compliance risk. Any change in the HCC could mean you are receiving too much or too little revenue. Either way, the code could not be validated and is considered discrepant.

An understanding of clinical documentation’s role and its impact on CMS-HCC enables one to see the big picture. Important points include:

-Well-documented medical records facilitate communication, coordination, and continuity of care, and promote the efficiency and effectiveness of treatment.

-Accurate coding is the key to prompt reimbursement, practice profiling, and contract negotiations. It is important for both financial and compliance reasons.

-Chronic conditions are important to show resource utilization, as well as severity of illness for statistical purposes.

-Being as specific as possible is important for further research into treatment effectiveness for chronic conditions.

-Showing medical necessity justifies your treatment choice and helps support evaluation and management levels.

2. Evaluate Ways to Improve Clinical Documentation

There may be opportunities within your current process to capture a more appropriate CMS-HCC code. For instance, consider this list of the top 10 coding errors for risk adjustment:

  1. The record does not contain a legible signature with credential.
  2. Electronic medical record (EMR) was unauthenticated (not electronically signed).
  3. Lack of specificity: Always assign the most precise ICD-9-CM code to fully explain the narrative description of the symptom or diagnosis in the medical chart.
  4. A discrepancy was found between the diagnoses codes being billed versus the actual written description in the medical record. If the record indicates depression, NOS (311 Depressive disorder, not elsewhere classified), but the diagnosis code written on the encounter document is major depression (296.20 Episodic mood disorders; major depressive disorder, single episode, unspecified), these codes do not match; they map to a different HCC category. The diagnosis code and the description should mirror each other.
  5. Documentation does not indicate that the diagnoses are being monitored, evaluated, assessed/addressed, or treated (MEAT).
  6. Status of cancer is unclear. Treatment is not documented.
  7. Chronic conditions, such as hepatitis or renal insufficiency, are not documented as chronic.
  8. Lack of specificity (eg, an unspecified arrhythmia is coded rather than the specific type of arrhythmia).
  9. Use of “unspecified” codes (eg, an unspecified arrhythmia is coded rather than the specific type of arrhythmia).
  10. A link or cause relationship is missing for a diabetic complication or there is a failure to report a mandatory manifestation code.

Regardless of where you find shortcomings in your facility, you should consider ways to improve clinical documentation. Develop a compliance plan and implement prospective and retrospective, internal and external chart reviews with ongoing monitoring and feedback. Be sure to review the record based on official coding guidelines.

Many plans use analytics to detect beneficiaries who might have missing diagnosis codes based on the analysis of pharmacy, claims, and durable medical equipment (DME) data. Analytics are a good tool to point you in the right direction, but they are not a silver bullet to fix missing diagnosis code issues. Even if analytics identify a patient is missing a diagnosis, and the medical record indicates the patient has the condition, often the doctor has not documented the condition in the appropriate manner (MEAT, etc.) which, from a coding guideline perspective, means that code can’t be submitted.

Prospective chart reviews reduce the chance of submitting invalid or non-specific diagnoses codes to CMS, and also reduce providers’ compliance risk. Implementing a review program allows you to identify problem areas quickly, and identify opportunities for provider education and interaction.

The medical record should tell a story. Coding specialists need to understand what the physician is thinking and know when the provider isn’t documenting the complete information necessary to assign the most specific diagnosis code. Identify all documentation improvement opportunities.

When target areas are identified, work with providers and staff to provide timely education and training to promote change.

3. Offer Solutions to Prompt Excellent Documentation

Identifying problem areas is only part of the battle. Translating this knowledge into improved documentation practices produces the real results.

Physicians have an overwhelming career, so whenever possible, provide simple solutions and tools to encourage necessary documentation. Tools meeting compliance standards for reimbursement provide continuity of patient care and allow the provider to do what he or she does best—provide quality medical care to patients. For instance, consider implementing templates, when appropriate, that prompt providers to document the status of chronic conditions.

Keep all your materials—including superbills or encounter documents, and internal policies and procedures—up-to-date.

For the medical record to be accurate and timely, a physician query process should be in place. Ongoing chart reviews and provider education reinforces good documentation and helps bridge the gap between what the provider needs clinically documented in the medical record from one visit to the next, and the coding guidelines required to support submitted codes.

You may try a variety of methods to improve documentation, monitoring their effectiveness and value, and then select the methods that work best with your providers and staff.

Whatever specific tools you adopt, ongoing education and buy-in from the providers are essential. Continue to stress to providers the importance of coding and documentation—how they affect reimbursement, and how they are used to evaluate the quality of health care facilities across the country [pay for performance (P4P), and Physician Quality Reporting Initiative (PQRI)].

4. Analyze the Results

You’ve convinced providers and staff of the importance of complete documentation and coding; and you’ve identified potential problem areas and implemented programs to correct those problems. Now it’s time to evaluate the results of your program to ensure its effectiveness.

Ongoing record review and provider education reinforces the essential points of good documentation. Utilize the documentation guidelines as your benchmark criteria.

Remember: The review’s purpose is to validate whether the medical record documentation supports the codes submitted.

Compile coding processes and results to determine where improvements could be made in method, effectiveness, and structure. Timely feedback is essential to facilitate a change in behavior.

Finally, keep up your efforts. Provide ongoing, periodic education, including yearly ICD-9-CM updates, to ensure your documentation and coding stay on track.

What is Medicare Risk Adjustment?

Medicare risk adjustment determines Medicare Advantage (MA) reimbursement or managed care enrollees’ health expenditures according to the severity of individual patient’s illness. This in turn drives treatment costs and resource use. Payments are higher for unhealthy members, lower for healthy beneficiaries.

The Balanced Budget Act of 1997 mandated risk adjustment methodology to improve payment accuracy and to strengthen the Medicare program. The methodology was fully implemented for MA in 2007. Payments are currently adjusted based on a calculation of chronic medical conditions, plus five demographic factors:

1. Age;

2. Sex;

3. Medicaid status;

4. Disabled status; and

5. Original reason for entitlement.

The Medicare risk adjusted reimbursement model is based on chronic, additive conditions, or hierarchical condition categories (HCCs). There are two types of HCC models:

  • Part C (Managed Care): MA published the final rate 2004 payments in December 2003. The CMS-HCC predicts plan liability.
  • Part D (Prescription Drug): Prescription (RX) Drug model announced the final Part D payments in April 2005. The RX-HCC predicts plan liability for prescription drugs.

Historically, physicians and medical groups focused on CPT® coding because procedural codes drove reimbursement. ICD-9-CM codes are the basis of the CMS-HCC model, however, and drive payments from CMS for MA beneficiaries.

There are more than 3,000 ICD-9-CM codes adjust risk, but only 70 HCC groups. Diagnosis codes are categorized into disease groups to include clinically related conditions with similar cost implications. The model is influenced heavily by chronic disease costs. Payments are based on the most severe disease manifestation when less severe manifestations also are present.

For instance, if a newly-diagnosed diabetic patient hasn’t developed any complications, you would code diabetes (250.00 Diabetes mellitus without mention of complication; type II or unspecified type, not stated as uncontrolled). If that patient develops a complication—such as diabetic neuropathy—the provider should document and code diabetic neuropathy (250.60 Diabetes with neurological manifestations; type II or unspecified type, not stated as uncontrolled, 357.2 Inflammatory and toxic neuropathy; polyneuropathy in diabetes), as it is a more severe manifestation of the disease.

Financial losses due to incomplete documentation or diagnosis coding can add up quickly. For example, annual reimbursement for 250.00 is $1,573 and for 250.60, 357.2 it’s $3,963. The difference in compensation to the health plan based on the severity of the patient’s diabetes is $2,390 annually.

The Risk Adjustment Factor (RAF) is a score identifying a patient’s health status. The RAF resets each Jan. 1, so chronic conditions must be documented, coded, and submitted at least yearly for each beneficiary. Otherwise, patients’ health statuses are not reflected accurately and the health plan is at risk of low RAF scores. This is important because CMS compensates the health plan a per-member premium that supports the provider’s contracts, disease management, case management, preventive services, and other services that typically are not covered benefits for Medicare members, but are covered benefits for the managed care or MA beneficiaries.


Carol Olson, CPC, CPC-H, CPC-I, CEMC, CCS, CCS-P, CCDS, is director of education and consulting services for The Coding Source, LLC. Carol oversees the MRA Coding and Education Division, managing 150 medical coders. She has 30 years health care experience in both private and public sectors, has conducted various risk adjustment coding and documentation trainings nationwide, and has taught the Professional Medical Coding Curriculum (PMCC) to hundreds of students. Contact her at


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