February 13, 2017

Risk Adjustment: Excitement and Anxiety

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The excitement and anxiety about risk adjustment in the healthcare industry is growing on a daily basis, and we are hearing tremendous hopes to learn and gain new expertise about the shift from fee-for-service (or volume-based) to fee-for-value (or value-based) reimbursement. Everyone in today’s healthcare organizations is feeling an increased urgency to equip themselves with the knowledge and tools necessary to take advantage of the financial impacts of value-based reimbursement.

The thesis of value-based reimbursement is actually quite simple and makes a lot of sense: deliver the best care to improve patient outcomes at the lowest cost. Instead of being paid according to the number of visits and tests providers order, providers’ payments are now based on the value of care they deliver.

The nThrive leadership team recently met for our annual meeting, and our CEO spoke of the information technology and revenue cycle challenges that healthcare providers are scrambling to address under the Patient Protection and Affordable Care Act (PPACA); developing the infrastructure they need is like “building the plane while flying it,” he said. A vivid visualization of this metaphor is to be found in a 2000 commercial for Electronic Data Systems (EDS), now part of Hewlett-Packard. The ad showed, well, an airliner, under construction as it flies through the air. The ad features incredible photography while playing inspirational music, showing the passengers hanging on and getting windblown while teams are busy building the plane. There is not a better way to explain the transition from fee-for-service to fee-for-value, as we are currently up in the plane building the future state while we still have our feet in both worlds.

HIM and CDI Prepare for Value-based Reimbursement (VBR)

Making the move to a value-based reimbursement model requires health information management (HIM) and clinical documentation improvement (CDI) professionals to become committed to becoming lifelong learners and educate themselves on every aspect of VBR. There is a tremendous amount to learn, so if you have not already gotten into your own research and education, here are a few action items for you to consider in 2017:

  • Become a voracious reader and learn everything you can about the PPACA, value-based reimbursement, population health, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the Merit-Based Incentive Payment System (MIPS), hierarchical condition categories (HCCs), the Program for Evaluating Payment Patterns Electronic Report (PEPPER), and quality metrics/core measures.
  • Have a seat at the table: know the strategy and roadmap of your organization, and identify projects and tasks to champion.
  • Take a deep dive into analytics. This is your sweet spot and now is the time to demonstrate your expertise. Who better knows the data that is being analyzed to address and measure financial and quality performance for each patient population?
  • Create best practices in care coordination, as you will be expanding to reach in-utilization management, CDI, coding, and information management to include ambulatory inpatient post-acute care.
  • Get to know your colleagues who manage your payer contracts. You cannot provide adequate CDI or coding expertise and/or quality performance tracking if you do not know the terms in your contracts. Hospitals must operate in the FFS world while attempting to anticipate value-based penalties or incentive bonuses.
  • Be the resource for regulatory and payer compliance. Reporting requirements for quality measures are rapidly changing and increasing for every payer. What was once tracking for 30-day readmissions for a small population is now expanded to include many other clinical conditions and payers, and extended to 90-day readmissions. Expect more!
  • Partner with your quality department colleagues. Many of today’s value-based incentives and penalties are driven by quality measures. Think of the dynamic team when HIM, CDI, and quality are working together, focused on the quality metrics.
  • Champion a renewed effort for an information governance framework in your organization. Given the vital nature of data accuracy, you must be the leader is searching for the “source of truth” of the data used as information in value-based reimbursement.
  • Work with your internal IT planning team to create a new integrated financial and clinical platform for a common view of the patient experience and associated information across care settings.
  • Understand the role and demands on the physician and build education programs and technology enablement to facilitate physician engagement with all of your “asks.”

Embrace the Goals of the Triple Aim

In closing, one last challenge as your prepare for risk inherent to quality-based payment systems in your organization: become well-versed in the goals of Triple Aim.

The term “Triple Aim” refers to the simultaneous pursuit of improving the patient experience of care, improving the health of populations, and reducing the per capita cost of healthcare. Note that the Triple Aim is a single aim with three dimensions. The Institute of Healthcare Improvement (IHI) has developed a set of high-level measures that operationally define each dimension of the Triple Aim. 


Pursuing the Triple Aim is an extremely ambitious purpose that will not be achievable through minor modifications of the status quo.

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Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Bonnie S. Cassidy, MPA, RHIA, FAHIMA, FHIMSS

Bonnie Cassidy is a leading HIM executive advisor, focusing her efforts on advancing clinical documentation integrity, risk-adjusted reimbursement, and health information governance. Cassidy was the 2015 chair of the Board of Directors for The Commission on Accreditation for Health Informatics and Information Management (CAHIIM) and the 2011 President /Chair of AHIMA. She is also a fellow of AHIMA, an AHIMA Academy ICD-10-CM/PCS certificate holder, and an ICD-10 ambassador, as well as a fellow of HIMSS and an advanced member of HFMA. Cassidy was honored to be the recipient of the 2014 Distinguished Member Triumph Award from AHIMA and the 2015 Distinguished Member Award from the Georgia Health Information Management Association. She is also a recipient of the Distinguished Member Award from the Ohio Health Information Management Association.

 Bonnie Cassidy has served as an executive with nThrive, Nuance, QuadraMed, the Certification Commission for Healthcare Information Technology (CCHIT), Price Waterhouse, and Ernst & Young, and was a HIM administrator at two major teaching hospitals, including the Cleveland Clinic Foundation. She is a member of the ICD10monitor editorial board and makes frequent appearances on Talk Ten Tuesdays.