Regulatory Evolution in Risk Adjustment

Regulatory Evolution in Risk Adjustment

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Until recently, the Office of the Inspector General (OIG) and the Department of Justice (DOJ) were seldom mentioned in news concerning documentation, coding, and risk adjustment. However, a recent surge in news coverage reveals a notable uptick in the engagement of these governmental bodies in matters of risk adjustment, whether conducted by Medicare Advantage health plans, risk adjustment vendors, or healthcare providers.

Aside from the increased scrutiny of OIG and legal action brought by the DOJ, clinicians or coders involved in risk adjustment might have also noticed a shift in these activities from coding accuracy to clinical validity. To make the distinction between clinical validity and coding accuracy clear, let's start with a simple definition of each:

Coding Accuracy

Coding accuracy involves assigning the most appropriate ICD-10 code that closely represents the clinical diagnosis documented in the medical record. This is achieved by adhering to official ICD-10 coding guidelines and guidance from the AHA Coding Clinic.

Clinical Validity

Clinical validity, on the other hand, assesses how accurately a clinical diagnosis documented in the medical record reflects the diagnosis a patient has. This assessment hinges largely on the level of detail included in the documentation, such as location, laterality, stage, severity, and other pertinent factors. In simple terms, it questions whether the patient truly possesses the diagnosis documented in the record.

During the initial stages of risk adjustment, regulators primarily emphasized coding accuracy, targeting instances of potential "up-coding" where higher severity or risk-weighted diagnosis codes were assigned compared to what was documented by the provider in the medical record. These cases were relatively straightforward, given the strict adherence to well-defined coding guidelines.

Over the past decade or so, many entities operating in the risk adjustment realm have found a way of circumventing coding accuracy audits by instructing providers through their "provider education" efforts to document higher severity or higher weighted diagnoses than what the patient has. While their coding met the highest levels of accuracy, their medical record did not truly represent the patients' actual diagnoses. In essence, they moved from "up-coding" to what can be defined as "up-documenting".

This shift in regulators' scrutiny, from coding accuracy—something most entities in risk adjustment have mastered—to clinical validity, was likely triggered by instructing providers to document higher severity or weighted diagnoses. Rather than merely verifying the correctness of assigned ICD-10 codes, regulators now scrutinize medical records to ascertain evidence of specific diagnoses, especially those with higher risk adjustments.

At Secondwave, our focus has always been on clinical validity. We consistently achieve over 95% coding accuracy in all our internal, client, and third-party audits. Concurrently, we dedicate substantial time and resources to ensuring that the information we provide to providers engaged in our prospective risk adjustment program is clinically valid. This approach not only shields us and our clients in the event of an audit but also promotes better provider engagement and reduces provider abrasion.

Partnering with us grants access to the market's most provider-centric, clinically focused, and compliance-tested risk adjustment program. It seamlessly integrates the efficiency of technology with the reliability of human-validated reviews. Our program offers the combined benefits of retrospective reviews for value assessment, the interactive engagement of a prospective program, and the robust documentation and coding outcomes derived from our concurrent reviews.

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Osamah El-Aroud
Osamah El-Aroud MD, CRC
Chief Medical Officer

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