Additional Reasons Payers Request Records

Dermatology practices are often inundated with medical- record requests from multiple payers looking to gather data for a plethora of reasons. Sometimes, the information within the record is needed to substantiate the level of the E/M or procedural service reported, to accomplish target-probe education reviews (TPE), or to perform recovery audits (recovery audit contractor [RAC] audits) or zone integrity audits (ZPIC audits). These types of requests will usually have a negative impact on a practice’s revenue cycle and, in some cases, there is potential for other types of consequences. There are, however, some additional reasons medical records are requested.

If you participate in a Medicare Advantage (MA) plan, the Affordable Care Act marketplace health plan, or a Medicaid-managed care plan, you may receive record requests that do not fall into any of the previously defined review practices. Rather, the payer is requesting the record to determine the patient’s overall health risk based on all of the patient’s existing medical conditions at the time of the visit. If the conditions are included within the requested documentation of the specific encounter, the payer will use this information to justify a higher rate of federal funding. This means that these plans are part of a risk adjustment (RA) payment model. Basically, these health plans will receive funding to provide coverage for their beneficiaries through an RA assessment.

The RA payment model was developed as a way to try to fairly distribute cost/funding by transferring federal dollars from plans that provide coverage for lower-risk enrollees to plans that have a larger population of high-risk enrollees.

This payment model uses an actuarial tool to evaluate the health of its members using risk scores based on patient demographic information (e.g., age, gender) and the diagnosis data reported from claims and medical record documentation. These risk scores are assigned to each beneficiary enrolled in the plan and used to predict future healthcare expenditures per member. The number of acute or chronic conditions and what illnesses the patient presents determines the level of risk assigned to each patient.

Most RA plans validate their patient population’s health status by means of an RA model using hierarchical condition categories (HCCs) to rank each patient’s severity of illness and to produce an RA factor (RAF) score. The RAF score is cumulative, i.e., the sicker the patient, the higher the score. The total RAF is multiplied by a conversion factor to determine the federal funding the plan receives for each patient per month.

Using diagnostic information taken from claims data, the plan will determine which enrollees have reported conditions that are included in the HCC listings. Federally funded plans such as MA plans may be subject to annual RA data validation (RADV) audits by the department of Health and Human Services (HHS). The plan must be able to validate the member’s HCCs through record review.

In the validation process, the plan will seek the five best claims documentation to confirm the patient’s HCC-related condition as reported in the plan’s determination of the RAF. The records selected for validation are then passed on to the funding source (i.e., the Centers of Medicare & Medicaid Services [CMS]) to confirm the HCC and RAF score. Any records determined to be insufficient to support the HCC reported are discarded by the funding source and the plan is denied the RAF score for that condition.

How does this relate to your practice? Consider the following scenario.

A. A 76-year-old-female is seen by her primary care physician (PCP) with complaints of itchy varicose veins in her legs, type 2 diabetes mellitus (DM2), and congestive heart failure (CHF). She is referred to dermatology to evaluate and treat her legs. The PCP reports diagnosis codes for the varicose veins in her legs, DM2, and CHF.

Per claims data, the raw RAF score is 1.333.

PCP claim data RAF



B. The patient is then seen by the dermatologist who confirms the diagnosis of varicose veins and initiates treatment. The comorbidities of DM and CHF are noted within the documentation, however only the ICD-10-CM code for the condition treated, which, in this case, is varicose veins is reported. Per claims data, the raw RAF score is 0.847 .

Dermatology claim data RAF

In this scenario, only two of the four possible RAFs are reported in the claims data. However, in its quest for best supporting documentation substantiating the reported HCCs, the plan can use encounter data that are included within the documentation but not captured in the claim to authenticate the HCC conditions reported.

The plan may request medical records from any healthcare entity that has provided medical services for the enrollee and generated a claim, including the dermatology practice in this example.

While including the additional conditions that affect or modify the assessment and plan of care may not impact the practice’s bottom line at the claim level, it does impact the payer’s, which may trickle-down to your practice in terms of fee schedule and plan participation. HCCs do not just appear in RA payment models. An HCC-approach is making an appearance in many emerging payment methodologies, including the cost performance components of Medicare Access and CHIP Reauthorization Act’s (MACRA’s) Meritbased Incentive Payment Systems (MIPS). MIPS uses a value-based payment adjustment calculated by comparing your cost for each enrollee to the per capita cost determined by the risk of your patients, and the HCCs are the bases for determining that risk. Omitting the codes for those chronic conditions that, although not managed by dermatology, impact the decision process, treatment provided, risk of complications, or healing time fails to reflect the level of risk assumed and the quality of care provided by dermatologist.

Accurate HCC assignment relies on complete medical record documentation and diagnosis coding at the highest degree of specificity. The documentation of the encounter should indicate that the diagnosis reported is being monitored, evaluated, assessed or addressed, or treated (MEAT).

For RADV, only two of the four MEAT criteria need to be documented. A simple but detailed statement is sufficient to meet this requirement. For example, in our case scenario above, a simple statement for our patient could be, “Diabetes mellitus type 2 appears controlled on Metformin and congestive heart failure is stable on Lasix. She is encouraged to continue her medications and follow-up with primary care as needed.”

It is clear that HCCs are a precursor in the shift away from relative value unit (RVU)/ Current Procedural Terminology® (CPT®)-driven module of reimbursement. While not every physician will treat all of the patient’s conditions, the documentation and acknowledgement of all existing comorbidities that affect or modify the care provided is becoming more and more a necessity.