Best practices for Medicaid risk adjustment accuracy

Applying risk adjustment best practices to the ever-changing landscape of managed Medicaid risk adjustment
For those providing health care in managed Medicaid markets, there are many challenges such as:

  • Risk adjustment models and timing vary from state to state. This makes it hard for managed care organizations (MCO) managing multiple plans to run a risk adjustment program across multiple states.
  • Seventy percent of states carry risk-bearing contracts with managed care organizations (MCO). Over 30 states use one of six different Medicaid risk adjustment models for MCO reimbursement.
  • State budgets limit the pool of funds distributed among the small set of health plans.
  • Medicaid providers struggle with access to timely data. They don’t have a member’s full medical history so it’s difficult to know if a member has existing health conditions that need assessment.
  • Medicaid populations are unique – they can enroll and disenroll at any time, are low engagers with their providers and often don’t know they have a health condition until very sick.

Differences between Medicare Advantage reimbursement and Medicaid reimbursement
Whether Medicare or Medicaid, risk adjustment reimburses health plans for the risk of the beneficiaries they enroll to help health plans balance costs by accurately identifying the health status and associated costs for each member. This is where the similarities end.

Medicare Advantage Medicaid
• Administered by the Centers for Medicare and Medicaid Services (CMS). • Administered by individual states.
• Health plan reimbursement paid at member level based on member risk scores. • MCO reimbursement paid at plan level based on the plan’s risk scores for total membership.
• Total reimbursement amount paid with approximately a year lag time. • Timing for reimbursement varies by state. For example, some states take up to 24 months from risk score identification to reimburse MCOs.

Benefits of accurate condition documentation
Documenting the health status of Medicaid populations accurately is very important to your risk adjustment program. Narrow margins associated with managed Medicaid plans can make the difference between profit and loss. Those margins can be affected directly by the accuracy of your risk adjustment practices. Because states base risk scores off claims, reimbursement you receive will be only as good as the claims you submit.

Three actions that may improve Medicaid risk adjustment accuracy outcomes
The following actions may help maximize the potential of your risk adjustment efforts to represent your population’s health status accurately. This may help improve health outcomes and close gaps in care:

  1. Empower providers with timely, actionable data at the point of care. This may help ensure that a member is fully assessed for undiagnosed health conditions. It is important for providers to document and code diagnoses accurately.
  2. Engage patients to come in for preventive and wellness visits. When members have regular visits, providers can diagnose and document health conditions. However, this is easier said than done. Patients may not understand their health benefits, have the means to get to their visits, are not physically able to leave their home or are afraid to go to the doctor. Providing education about their health conditions and health benefits may contribute to better engagement and health outcomes.
  3. Review charts to be sure providers identify all health conditions and that staff codes and submits all conditions correctly. Complete and accurate information helps states compare and assess all risk scores for health plans providing health coverage in Medicaid markets.

Are those three actions that important?
They are! Closing gaps in care is the main goal of an effective risk adjustment program and that may help create a positive impact all around. Patient health care outcomes may improve as may risk scores. When your risk scores improve, your bottom line may improve.

Work with a partner that:

  • Has experience working with state Medicaid requirements.
  • Can help you improve provider and member engagement efforts.
  • Has the analytic capabilities to do targeted chart reviews to find open gaps or look for conditions that were diagnosed but not coded.


About the author:

Sam pic_Provider_blogSam Diederich
Vice President, Strategy & Business Integration, Optum

Sam Diederich leads the overall business strategy for the Optum® Risk Adjustment and Quality Management business, responsible for business development and execution, and strategic partnerships. For more than 10 years, Sam has been developing innovative strategies for health plans and providers in the areas of risk adjustment, utilization management and government-sponsored quality-of-care programs. Sam holds two bachelor’s degrees from the University of St. Thomas’ Opus College of Business: one in financial management and one in economics.

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