Risk Adjustment: Documentation and Diagnosis Coding

Risk adjustment is a payment methodology developed primarily for insurers. Health plans that participate in government-developed risk adjustment programs accept payment based on anticipated healthcare expenses of all enrollees, removing payers’ incentive to insure only lower-risk (healthier) patients.

In a risk adjustment model, a patient gets a risk score based on demographics, such as age and gender, as well as health status. ICD-10-CM codes, which represent a patient’s diagnoses, provide data about health status and, therefore, the expected outcomes and costs of care. The role of ICD-10-CM codes makes proper documentation and reporting of diagnoses essential to the success of risk adjustment programs.

Clinical Documentation

Clinical documentation is the catalyst for coding, billing, and auditing. Clear, complete, and specific documentation is the conduit for, and provides evidence of, the quality and continuity of patient care. Most providers document reasonably well for medical care, but many are unaware of the details needed for accurate code selection for billing, reimbursement, and quality measures purposes.

One purpose of a risk adjustment program is to capture the overall health status of a patient so insurance companies can predict the healthcare costs of its members, allowing implementation of quality health management. Often in risk adjustment, an unspecified or poorly specified condition may result in a risk score that does not reflect the true health condition of the patient nor does it result in accurate reimbursement for a condition more costly to treat.

Many provider groups and insurance plans offering risk adjustment programs use a strong clinical documentation improvement (CDI) program to close the gaps between clinical care and specificity in documentation. Adapting the compliance program advice from the Office of Inspector General (OIG), found in the Oct. 5, 2000, Federal Register, the following elements are important for the success of a healthy documentation improvement program.

Key Elements for Successful CDI

  • Establish a baseline audit schedule to ensure documented diagnoses were accurately coded and included in the claim submission.
    A baseline audit examines the claim development process from patient intake through claim submission. The audit will establish a consistent methodology for selecting and examining records and will serve as a basis for future audits.

    The 2021 ICD-10-CM Official Guidelines for Coding and Reporting , Section IV.I and Section IV.J, instruct that all chronic conditions treated on an ongoing basis may be coded and reported as many times as the patient receives treatment and care for the condition. The guidelines also state it is appropriate to report all current co-existing conditions that affect the care and management of a patient. For risk adjustment, reporting of chronic conditions is necessary at least once each calendar year for accurate risk score calculation.

    Conducting routine audits for proper medical record documentation is vital for any clinical documentation improvement program as well as for the success of a risk adjustment program.

    Some electronic medical record systems allow for “flags” to remind the provider that previously diagnosed conditions have not been addressed yet this calendar year. This practice helps ensure not only continuity of care, but also documents an accurate picture of the overall health status of the patient.

  • Establish a training and education program to address areas of improvement identified in the audits.
    Provider groups and risk adjustment insurance companies should have a training program in place that includes specific documentation and coding information for their most commonly seen diagnoses based on claim submission analysis. Addressing the coding requirements for diagnoses with providers helps them to understand the need for specificity in their documentation. Use examples of actual medical records and include the solution to the documentation issues found.

    In addition to facilitating high quality patient care, a properly documented medical record verifies and documents precisely what services were provided for specific diagnoses. Address all components of the medical record, from ensuring the use of proper patient identifiers when preparing the note for the visit, to confirming the provider signed the note at the conclusion of the encounter including full name and credentials. If it is an electronic record, also confirm that the date and time are visible with the signature. Documentation in the body of the note should include:

    • Reason for the encounter
    • Relevant history including addressing conditions contained in a problem list to monitor the patient’s progress, response to treatment, or changes in status or treatment of historically documented conditions
      • If a condition is historical, consider using terminology such as “resolved” instead of “history of.” “History of” is an ambiguous phrase that could mean a condition was present years ago but is no longer present today — or it could mean a condition was first diagnosed years ago and is still present today. Clarity is important for accurate coding and can be achieved by stating a status of resolved, currently stable, etc.
    • Physical examination findings and test results for conditions being addressed
    • Linking current prescription medication used to the condition for which it was prescribed
      • In the case of a primary care provider, this would include conditions diagnosed and treated by other physicians but that affect the medical decision making for this provider.
    • Final clinical assessment of diagnoses associated with the encounter to the highest level of specificity known
    • Plan of care, which includes treatment, diagnostic tests ordered, and follow-up recommendations
  • Put your documentation improvement program in writing.
    The OIG believes that written standards and procedures can be helpful to all physician practices, regardless of size. Written policies with a clear outline of purpose and plan will help ensure continuity of the program.

Beginning with a documentation improvement program leads the way to ensuring the accuracy of the coding staff. When drafting an improvement program, consider adding measures that include auditing the coding staff based not only on claim rejection, but also on specificity of coding diagnoses directly from the medical record. If a coder isn’t capturing what the provider documents, the success of a clinical documentation program cannot be accurately measured.

Medical Coding for Risk Adjustment

While all risk adjustment payment models differ in some areas, one common ground they hold is diagnosis coding. Risk adjustment is a payment methodology that uses ICD-10-CM codes, organized into Hierarchical Condition Categories (HCCs), to establish a risk score for each patient.

Medical coders have a special role when it comes to coding for risk adjustment, and there are measures they can implement to increase coding accuracy. Whether an HCC coder (also referred to as a risk adjustment coder) is coding for a physician’s office, a health plan, or a government auditing contractor, they need to understand the complexity of diseases associated with chronic conditions or comorbidities to ensure the documentation supports the accurate health status of the patient. Medical terminology, anatomy, and pharmacology are additional areas of expertise required of competent risk adjustment coders.

Keep in mind, what might be “good enough” to establish medical necessity on the fee-for-service (FFS) claim may not be specific enough for accurate risk score calculation. As Scenario 1 shows, HCC coding relies on all documentation available, not just the provider’s final assessment, for a date of service. The scenarios below use HCCs from the Centers for Medicare & Medicaid Services (CMS).

Scenario 1

A provider documented in the medical record details about their 65-year-old patient who recently enrolled in an MAO. She came in for her Welcome to Medicare office visit. Of special note, the medical assistant documented a depression screen result of 11 which indicated possible moderate depression. The patient had a diagnosis of depression in the problem list and had been on an antidepressant for about six months with no notable improvement. The physician addressed the questionnaire with the patient, asked some more pertinent questions, and listed moderate recurrent major depression in the final assessment.

The coder entered the correct service code along with the diagnosis codes of Z00.01 Encounter for general adult medical examination with abnormal findings and F32.9 Major depressive disorder, single episode, unspecified.

The claim was paid; however, during a routine audit as outlined in the office’s clinical documentation improvement plan, an auditor noticed that the coder did not accurately code the depression as diagnosed by the provider (F33.1 Major depressive disorder, recurrent, moderate). While this particular change in diagnosis coding would not affect the payer’s decision about medical necessity and payment, it does affect the risk score calculation of the patient.

Incorrect Code

F32.9 = no mapping to CMS-HCC/no risk score

Correct Code

F33.1 = CMS-HCC 59/score value of 0.309

As much as it is important to accurately capture all conditions that currently exist and require treatment, it is equally important to not submit diagnosis codes for conditions the documentation does not support. For instance, when the full documentation for the encounter provides more accurate information for coding purposes than the assessment does, the coder should base code choice on the full documentation, as shown in Scenario 2.

Scenario 2

A 72-year-old male patient presented to the office for a routine follow-up of ongoing residual left-sided weakness due to his stroke last year. A detailed exam was performed. The patient stated he was feeling well, was taking his medications as prescribed, and had help at home to aid with his limited walking stability and other Activities of Daily Living. He refused a wheelchair or physical therapy at this time. The provider listed stroke in the final assessment.

The coder reviewed the documentation of the office visit before submitting the claim and accurately coded I69.354 Hemiplegia and hemiparesis following cerebral infarction affecting left non-dominant side.

The risk adjustment coder knew of AHA Coding Clinic® for ICD-10-CM and ICD-10-PCS guidance from 2015, which instructs coders to code weakness due to stroke as hemiparesis. The coder also applied ICD-10-CM Official Guidelines for Coding and Reporting, Section I.C.9.d, concerning coding sequelae of cerebrovascular disease to capture the late effect of the stroke instead of coding an acute cerebrovascular infarction (I63.9 Cerebral infarction, unspecified) after the acute phase of the stroke has resolved.

Incorrect Code

I63.9 = CMS-HCC 100/score value of 0.230

Correct Code

I69.354 = CMS-HCC 103/score value of 0.437

CMS has made it clear that it is the responsibility of the health plan to not only gather diagnosis codes that support specific HCCs, but to also look for overcoded conditions. Overcoding in risk adjustment refers to using an incorrect code with a higher score value rather than the correct code based on documentation. Scenario 3 provides an example of how to prevent overcoding.

Scenario 3

A 67-year-old female presented to the office for follow-up of an ulcer on her left calf. Previously the provider had documented this was related to her atherosclerosis and ordered wound care. In today’s exam the provider noted the ulcer was healed, but in the assessment the provider continued to document atherosclerosis with left calf ulcer. The electronic medical record (EMR) system chose I70.242 Atherosclerosis of native arteries of left leg with ulceration of calf for this diagnosis.

The coder reviewed the inconsistent documentation and queried the provider. The correct code of I70.202 Unspecified atherosclerosis of native arteries of extremities, left leg was submitted.

Incorrect Code

I70.242 = CMS-HCC 106/score value of 1.488

Correct Code

I70.202 = CMS-HCC 108/score value of 0.288

There may be instances in which the coder cannot make an educated determination of the correct code and clarification from the provider is necessary prior to claim submission. If warranted, the provider may attach an addendum to the office note clarifying the documentation.

Most likely though, a coder’s communication will come in the form of documentation improvement training, as the next section describes, based on findings during a retrospective review and not from a concurrent query.

Provider Clinical Documentation Improvement Examples

Below are some documentation issues that an expert coder may find during a chart audit. How a coder processes the rationale and then communicates that information to the provider is important for establishing and maintaining a mutually respectful relationship.

Topic Area Documentation Coding Check and Rationale Comment to Provider Education
Uncontrolled diabetes Patient’s A1C is listed and insulin is adjusted. The provider selected E11.65 Type 2 diabetes mellitus with hyperglycemia in the EMR system. The ICD-10-CM index lists both hyperglycemia and hypoglycemia under the entry for uncontrolled diabetes mellitus (DM). Uncontrolled DM cannot be coded to E11.65 without the provider stating hyperglycemia or another term indexed to hyperglycemia: poorly controlled, out of control, or inadequately controlled. “Uncontrolled” diabetes does not have a direct code in ICD-10-CM. Please document the significance of the A1C to the condition. Show provider the terms available in ICD-10-CM to describe the control of diabetes without using “uncontrolled.”
Fracture The provider lists a femur fracture in the assessment but also notes s/p repair, and patient is improving and ambulating with a cane. Fracture guidelines are specific that the 7th character “A” should be used only with fractures when active treatment is being administered to the fracture site. Only the initial episode of care will risk adjust. To assign the correct fracture code, please clarify the episode of care to the fracture site. Show provider an example of the 7th character episode of care box from the ICD-10-CM Tabular List relative to fracture documentation, and share ICD-10-CM Official Guidelines on what those terms mean.
Lupus The type of lupus is not documented. AHA Coding Clinic®, Vol. 5, No. 3, has recommended each facility develop a standard of whether to code M32.9 Systemic lupus erythematosus, unspecified when “lupus” is documented. There is no default code for the diagnosis of “lupus.” Please document the type, if known. Request a protocol in writing to establish the documentation required and proper code assignment for “lupus.”
Long-term insulin use Insulin is listed in the current medication list. Typically, a diabetic patient is prescribed this medicine, but a thorough review of the medical record showed it did not include diabetes. Insulin is seen in the medication list, but the condition for which it is prescribed is not documented. Explain that, per ICD-10-CM Official Guidelines, Sections IV.I and IV.J, documentation of all chronic and co-existing conditions being treated and that affect medical decision making should be included in the medical record documentation on each date of service.

Risk adjustment coders should never suggest what to document solely for risk adjustment purposes; it is a good idea to avoid focusing on risk value examples when reviewing a medical record with the provider, even if risk value was part of the decision to initiate education to the provider. Accurately capturing the health condition of a patient to support quality patient care is the utmost priority regardless of financial outcomes of risk adjustment.

Last reviewed on March 8, 2021

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