Primary provider reimbursement should reflect (1) RAF score (2) number of beneficiaries.
- Understanding RAF scores and how it impacts the financial viability of the ACO
- How to improve the RAF score
- Optimization of RAF score.
1. Understanding RAF score and how it impacts the financial viability of the ACO
“Accurate coding drives accurate risk adjustment, which will increasingly impact your bottom line.1”
The CMS-HCC model is a prospective risk-adjustment tool used to calculate expenditure benchmarks for MSSP ACOs. Generally, the model estimates higher expenditures for sicker beneficiaries and lower expenditures for healthier ones.
HCCs are termed hierarchical because, for some disease states such as diabetes, multiple HCCs capture differing severity of illness. Within an HCC grouping, a patient is assigned only the HCC that corresponds to the most severe manifestation documented.
The CMS-HCC model incorporates:
1. Demographic information is incorporated in the form of age-sex pairs as well as disease-disabled status and Medicaid eligibility.
2. Interactions between diseases.
CMS calculates a risk score, or “risk adjustment factor” (RAF) score, for each individual beneficiary and provides this information to each ACO quarterly.
The model is normalized to a value of 1.0. Risk scores generally range between 0.9 and 1.7, and beneficiaries with risk scores less than 1.0 are considered relatively healthy.
Table 1: CALCULATING THE RISK SCORE AND EXPECTED ANNUAL EXPENDITURE2
Individual scores/weights are assigned to patient demographics and HCCs and then added together to calculate the total risk adjustment factor (RAF) score. RAF scores are then multiplied by the published denominator ($9,050 as of 2014) to derive an expected annual expenditure.
The following example shows the RAF score and expected annual expenditure for a 76-year-old male with three conditions.
For a nascent MSSP ACO, getting your benchmark right has immense financial implications, because benchmarks generally aren’t adjusted upward but may be adjusted downward.
Establish tier levels based upon deviations from the mean to establish improvement in provider HCC coding and base individual provider reimbursement upon RAF score and number of beneficiaries.
Table 2: Proposed reimbursement level based upon RAF scores
2. How do we improve the RAF scores of the individual providers?
1. Educate physicians/ HCC training
2. Third party assistance, clinical providers who can assist with accurate patient coding and complete home or skilled nursing facility visits
3. Financial incentive
a. Tiered payments
b. Beneficiary contribution-based payments
Inherent in this pay structure is the acknowledgment that physicians will be asked to change the way they code for chronic conditions3,4. A merit and volume based pay structure will help physicians make necessary changes to ensure the success of the ACO. Physicians will be asked to shift their focus from episodic charges to global charges with a focus on driving down costs of healthcare.
Many are already practicing as such, but the data shows there is room for improvement. particularly with HCC coding. To stimulate change, financial incentives play a key role.
1. John P. Yeatts, MD, MPH, and Devdutta G. Sangvai, MD, MBA HCC Coding, Risk Adjustment and Physician Income: What you need to know. Fam Pract Manag. 2016 Sep-Oct;23(5):24-27.
2. John P. Yeatts, MD, MPH, and Devdutta G. Sangvai, MD, MBA HCC Coding, Risk Adjustment and Physician Income: What you need to know. Fam Pract Manag. 2016 Sep-Oct;23(5):24-27.
3. PHIPPS-TAYLOR, M. and SHORTELL, S. M. (2016), More Than Money: Motivating Physician Behavior Change in Accountable Care Organizations. The Milbank Quarterly, 94: 832-861. doi:10.1111/1468- 0009.12230
4. Berenson, R.A. & Rich, E.C. J GEN INTERN MED (2010) 25: 613. https://doi.org/10.1007/s11606-010-1295-z
This article is a excerpt from a financial proposal to restructure an ACO reimbursement model.