From Tom's Desk

Peak Risk Coding?

It’s time to be a risk-coding contrarian.


Pretty much everyone has figured out that a creating a Medicare Advantage organization (MAO) is a license to print money—-for now at any rate.


Get your product approved, collect some patients, submit some codes and let the money roll in.


Even former HHS Secretary Kathleen Sebelius and former Senator Dr Bill Frist are getting in on the action.


With the failure of recent large qui tam actions and continued reliance on toothless internal audits, enforcement is only an issue for the very small fry. There isn’t even much RAC action yet, even though it’s been mandated by federal law for almost a decade.


So code the heck out of your patients and worry about clawbacks later, that is if there are any at all.


Patient care?  With such great gross revenues, just approach it like you would any old HMO—-narrow your networks, limit your physician compensation, and implement prior authorization for expensive procedures.  


Just keep signing people up and the capitation dollars will roll in.



It’s not going to last much longer.



The higher the total risk scores in Medicare Advantage, the more CMS will adjust down the value of each score.  They already do it to the tune of a 5% across the board decrease---a rate that is re-visted yearly. As the risk scores pile up, look for capitation rates to be adjusted down even more.


MAOs are going to spend more and more resources to collect less and less money.


Not a winning business strategy.


Certainly not one that capital investors signed on for.


Fortunately for you, it’s net revenue that’s actually matters.


So instead of creating that enormously expensive infrastructure to collect risk codes, concentrate on delivering good care through a robust primary care work-force with aligned incentives.  That way, risk-code collection can be performed from the bottom-up, through your primary care workforce.  

It's far less expensive, encourages internal innovations and creates systems that are anti-fragile in any payer environment.


That way, when your gross revenues go down—-and they will—-your net revenue won’t necessarily do the same.

You Should Know...

Incumbent Advantage Much Larger Than Thought

The Congressional Budget Office (CBO) released its analysis on differences in risk coding intensity between beneficiaries who stay in fee-for-service Medicare (“stayers”) and those who switch from fee-for-service Medicare to Medicare Advantage (“switchers”).


Unsurprisingly, switchers had higher risk scores than stayers.   And the longer a stayer kept their coverage with the same insurer, the higher their risk scores, and the greater the gross revenue generated.


The study, which ran from 2008 to 2013, did not find any risk code ceiling had been reached.


So the longer an insurer has been in a market, the more gross revenue they'll have to defend their position---and as of 2013 there was no limit to that advantage.


There are an enormous numbers of new players entering the Medicare Advantage market in 2018---few realize their competitive disadvantage in competing for patients.


With risk-code density increasing exponentially, each risk code will be worth less in adjusted capitation dollars.  That, plus the inherent revenue advantage of incumbency noted by the CBO, translates into new market entrants facing truly significant headwinds as they get up and running.


Starting a new MA plan has always been extremely capital intensive. It just got much more so. A new player is now going to burn through a whole lot more capital on the road to profitability than they would have three years ago.


New investors may find that, far from a license to print money, a Medicare Advantage plan may instead be a license to burn it.


High-Value Insight

Coding from the Past Medical History

CMS says you can submit risk codes from the past medical history, but you can actually do so only under certain circumstances.


If you see a patient and a medical condition listed on their past medical history impacts your decision making, document your thought process.


If you do that, you can submit the code from the past medical history.


For example, if a patient has Hepatitis C and comes in for a cold, the hepatitis will affect your advice regarding the use of over-the counter medications. Document “told patient not to use Tylenol for fever due to Hepatitis C.”


You didn’t really address the Hep C, but it did affect your medical decision making—-so you can submit the code.


Although you really should be submitting your codes during the patient’s yearly visits, sometimes one get’s missed, or the person won’t come in. And this is a great way to catch it during a brief visit where you don’t have the time to fully address a big, chronic problem.

And then you can have them come in for an appropriate length visit so you can deal with that bid chronic problem properly.


Q&A with Dr. Tom


My medical director told me to just cut and paste the problem list onto the assessment portion of my yearly visit note during my patient’s annual exam. Should I do as she says?


Good Lord no!



This is an actual question from a client.


Even in today’s “kitchen sink” approach to risk coding, this tactic is beyond the pale—-risky, inappropriate and potentially very costly.


And the organization in question apparently had the blessing of their director of compliance for this approach.


Only document those illnesses you address during your encounter. DO NOT cut and paste anything, ever.


It wastes your time, invites audits and will result in massive clawbacks.


  • Take good care of your patients.
  • Learn to identify and submit the small number of codes which stem from taking that good care.
  • Then don’t worry about it.


You’ll have more time to enjoy, be much less likely to be audited and rarely have to give money back.


And you won’t go to prison—-at least not for that.



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