Find-A-Code Focus Newsletter

Risk Adjustment, What is it?

November 25, 2014



Risk adjustments are used to compare Actual and Expected Mortality Rates using Risk Adjustments calculated by patient risk score.

BC Risk Adjustment — Risk Adjustment 101

WA Regence Administrative Manual 

Risk adjustment is part of the Regence Medicare Program Management for Medicare Advantage plans. Commercial risk adjustment is a requirement of the U.S. Department of Health and Human Services (HHS) for small group and Individual health plans. The CMS and HHS risk adjustment models utilize Hierarchical Condition Categories (HCCs). Each HCC contains International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) diagnosis codes that are similar in disease processes and/or body system. HCCs, in conjunction with patient demographic information, are utilized in the annual patient risk score calculation process. The patient risk score is intended to accurately represent the individual patient’s disease burden.

Because ICD-9-CM codes determine HCC assignment and, ultimately, the patient’s annual risk score, clinical documentation and diagnosis code reporting at the provider level are key in the development of an accurate patient risk score. Medicare Advantage payments from CMS and commercial risk adjustment transfer payments from other health plans are based on the member risk scores. It is, therefore, important that the diagnosis code data submitted via the claim for services includes as much coding detail as possible. We conduct regular reviews of medical records to validate that the diagnosis codes reported are accurate and supported in the medical record. Because patient diagnoses do not carry forward from one year to the next, under the risk adjustment model, all existing and chronic conditions must be evaluated and documented in the medical record at least once each calendar year for each patient, and the corresponding ICD-9-CM codes should be reported via the claim for services.


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