What is Medical Risk Adjustment?
At times, patients cannot settle their medical bills either because they do not have coverage or have a healthcare insurance policy with high deductibles. Medicaid Risk Adjustment comes in hand to offset the cost of giving such individuals health insurance.
Medical risk adjustment caters to clients who are considered as high risk to insurers. They include those managing chronic health conditions such as:
- high blood pressure
- type 2 diabetes
- chronic obstructive pulmonary disease
- chronic heart failure
- chronic hepatitis
- multiple sclerosis
Medical Risk Adjustment refers to the changes in capitation payments based on the diagnostic for the client. The payments are also based on the set amount per individual member per month, instead of the regular fee-for-service payments.
Here’s Why Risk Adjustment Matters
When risk adjustment plan payment comes into play, CMS (Center for Medical and Medicaid Services) makes precise payments to health providers for those enrollers with variables in the expected medical costs.
In the absence of policies regarding medical risk adjustment, health insurers would have the chance to deny medical insurance to high-risk individuals. They’d also have the leeway to write exclusions in their policy documents. Further, they’d impose costly premiums for this group of patients.
Medical risk adjustments main objective is to provide comprehensive insurance to all clients, regardless of their risk. It also allows plans that cover the prone-than-overage population so that they are charged equal premiums as the rest of the relatively healthier clients.
The medical risk adjustment model uses a patient’s demographic data such as age, sex and diagnostic process results to develop a risk score. The risk score is a relative determiner of the relative costs to insure a client. For instance, a 70 years old client has a higher risk score than a 20 years old individual. At the same time, those with a family history of certain health conditions may have a higher risk score than clients without a history.
Medical Risk Adjustment models are calculated depending on the complete and precise reporting of clients’ data. For instance, a center for medical and Medicaid service (CMS) demands that only a qualified healthcare professional can single out all chronic conditions and that severe diagnoses for an individual patient, then take the place of a “base year” health data for those clients.
All medical records must be incongruence with the presence of the said condition and indicate the medical professional’s assessment and the management regimen for that condition.
This follow-up must last at least once every year. The data is crucial as it will be used to calculate the relative insurance cost for the subsequent year.
Consequently, an incorrect diagnosis can affect a client care and reimbursement for their care for subsequent visits.
ICD-10 CM codes are another risk adjustment model that is commonly used. It is not every diagnosis that is affected by risk adjustment. For instance, the medical costs of acute illness or injuries cannot be predicted.
In a nutshell, accurate reporting of individual patient data is the bedrock of all risk adjustment models.