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Building your competitive (Medicare) advantage

October 27, 2016
Medicare Advantage beneficiaries represent a complex demographic.
Chief Executive Officer, Retired


Coding Gaps Blog for text insertTen thousand Americans turn 65 years old every day and become eligible for Medicare benefits. This silver tsunami began crashing down upon the healthcare system in 2009 when the oldest of the baby boomers reached 65 and, until 2030, every day will bring 10,000 more.

Every day, Medicare Advantage (MA) gains an increasing share of this expanding Medicare market. Since its beginning in 2010, MA enrollment has grown by 40 percent, with 5.4 percent growth between February 2015 and February 2016. Today, there are 17.6 million seniors enrolled in MA plans, accounting for 32 percent of the overall Medicare market and enrollment is predicted to continue to rise for at least the next five years.

Medicare Advantage beneficiaries represent a complex demographic when it comes to health plan revenue. They are high utilizers of health services (which is good for business), but their care is not reimbursed on a volume basis (which is less good). Health plans must understand and implement different strategies to succeed within the MA market.

The Impact of Coding Gaps

The Centers for Medicare and Medicaid Services (CMS) reimburse health plans for their MA beneficiaries based upon each beneficiary’s health risk score and not on services they receive. Health risk scores are calculated through a combination of demographics and submitted disease and condition information (Hierarchical Condition Codes). The accurate coding of disease, disease states and medical conditions is the key to success with MA plans.

Hierarchical Condition Codes (HCC) are the foundation for determining a beneficiary’s health risk score and one of the few ways health plans can influence reimbursement rates.

With inaccurate coding:

  • Beneficiaries may miss important care opportunities such as:

    • >Preventive services
    • Case or disease management programs
    • Ongoing care through primary care physicians
  • Commercial plans must offset losses from unreimbursed services
  • Emergency departments become over-utilized

Accurate coding of disease and condition information is challenging – codes are erased at the beginning of each year, physicians responsible for coding are rarely incentivized or rewarded for their efforts, and the codes themselves are highly detailed and complex.

To solve this problem, forward-thinking health plans take a holistic approach. They offer education and incentives to their provider networks along with sophisticated technology to reduce the administrative burden, identify missing codes, improve coding accuracy, and help ensure MA beneficiaries receive the services they need in a timely fashion.

Coding Case Study

Frank, a 66-year-old male, was diagnosed with heart failure (HF) in 2014. In 2015, he visited his PCP, but since his heart failure was under control, the physician did not document it (or did not document it properly) and the code could not be maintained for 2015, reducing Frank’s risk score by 0.369 or $3,680.

Looking at the rest of Frank’s conditions reveals opportunities for detail that greatly increase both the understanding of his overall health needs and his health risk score.

Closing Coding Gap Chart

In the example above, the health plan left $11,300 on the table due to incomplete coding. This value is just the beginning. Health services required by Frank during this year that exceeded the lower value would not be reimbursed. Without a complete understanding of Frank’s conditions, interactions and health needs, he may not receive services that would improve his health (disease and case management, ongoing monitoring for example). Finally, without preventive services and monitoring, Frank is at risk for ending up in the emergency department.

Many of today’s technology solutions do not provide the greater coding and claims picture of any single MA beneficiary, placing health plans and providers at a disadvantage for appropriately delivering care and maximizing reimbursement.

Download our whitepaper to learn how health plans can use analytics to improve care and boost revenue for their Medicare Advantage members.