Fitting Coding and CDI into MACRA

Back in 2014, I wrote an article called “Holistic Collaborative Documentation,” published in RACMonitor.  The thought behind that article was about not only how important physician documentation is within any setting but also about the need for coders and CDI (Clinical Documentation Improvement) professionals to assist in the appropriate reporting and capture of this information. Providers have had a long-standing history of minimizing diagnosis coding in the Part B revenue cycle. A key difference in Part A and Part B coding is the laissez faire approach providers take for reporting Part B diagnoses. The only times these diagnoses become of concern is when the need to justify the test for medical necessity arises and payment becomes of utmost importance due to denial or non-coverage. As I stated in that article 2 years ago, the need has come for us to better reflect what is occurring within the clinic setting and providers need to take a “holistic” approach to documentation. Medicare Access and CHIP Reauthorization Act (MACRA) is here and providers are yet another step closer to reaching the (Centers for Medicare and Medicaid Services (CMS), “Triple Aim”.

You may ask, “What does MACRA have to do with coding and CDI…MACRA is only a Quality Payment Program (QPP) that replaces the current Sustainable Growth Rate (SGR) methodology? It is only financial and is another way to measure quality of care, incentivize providers, and profile clinicians.” Well, all those things are true but it goes a step further. Programs within the QPP are risk-adjusted for severity. This means that a patient’s diagnosis is utilized to categorize the patient based on how sick they are; diagnoses. This measure of diagnoses adequately shows you and the payer the true costs of treating the patient.

Here is an example. Many providers have been participating in Accountable Care Organizations (ACOs) for years. ACOs provide care to a population of patients. Primary care physicians, specialists and hospitals manage patients as a group. The participating physicians and hospitals jointly take responsibility for the cost and quality of patient care, and they function under a various risk-sharing arrangements. There are many types of ACOs which are Alternate Payment Models (APMs) and now, in some cases, under MACRA Advanced Alternate Payment Models. Historically ACOs have had many challenges. There have been some successes and some failures. One potential problem could be the inability to adequately project benchmarks for cost of caring for the patient due to an inadequate picture of the patient from a diagnosis perspective. However, keep in mind, there are other factors that also come into play such as age, sex, socioeconomic status, and geographic location.

“The benchmark is a surrogate measure of what the Medicare Fee-For-Service Parts A and B expenditures would otherwise have been in the absence of the ACO. The initial benchmark is risk adjusted using the CMS Hierarchical Condition Categories (HCC) risk adjustment model that was originally developed in conjunction with the Medicare managed care (Medicare Advantage) program, also known as Medicare Part C. The HCC risk adjustment model is used to calculate expected expenditures for a population of Medicare beneficiaries. Although costs for an individual beneficiary may be higher or lower than expected, these variations are likely to balance each other across a population of beneficiaries. To minimize variation from catastrophically large claims, CMS truncates an assigned beneficiary’s total annual Parts A and B Fee-For-Service per capita expenditures at the 99th percentile of national Medicare Fee-For-Service expenditures as determined for each benchmark year. (“Methodology for Determining Shared Savings and Losses under the Medicare Shared Savings Program Fact Sheet”.  DEPARTMENT OF HEALTH AND HUMAN SERVICES (DHHS) Centers for Medicare & Medicaid Services).

“Properly implementing a risk-adjustment mechanism is critical to intelligently assigning budget responsibility to an ACO.” (American Academy of Actuaries, Risk Assessment and Risk Adjustment, May 2010 issue brief: It is important to ascertain the ACO payment with the actual budget.

This is only an example of one type of APM/Advanced APM that is risk adjusted for diagnosis. The two models of risk adjustment utilized most often is CMS HCC Model utilized widely in Medicare Advantage plans and the HHS HCC Model which is mostly utilized within patient populations that are more diverse such as with the DHHS Healthcare Market Place. It is important for providers to become accustomed to these models and how to utilize HCCs properly.

Example APMs/Advanced APMs risk-adjusted utilizing HCCs:


The payment shift to increased quality through MACRA is another step toward providers needing documentation that is “holistic” and adequately reflects the population of patients served. This concept is crucial as providers are profiled and data is made more publically available. Oh yeah, did I mention HCC also has impact on PQRS and Value Modifier? I will try my best to explain that more very soon along with what we should be doing to prepare. In the meantime, contact me for questions or next steps.

Sharon Easterling, FAHIMA, MHA, RHIA, CCS, CDIP


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