Medicare+Choice Risk Adjustment: Don't Leave Money on the Table - analysis of Principal In-Patient Diagnostic Cost Group methodology - Statistical Data Included

Healthcare Financial Management, August, 2001 by John K. Gorman

Conclusion

Early mastery of risk adjustment is a key to long-term survival for Medicare Choice organizations. Inpatient encounter-data reporting is easy when compared with the demands of CMS's comprehensive risk-adjustment system. This system will be implemented in 2004 and will be fed by encounter data from both outpatient and inpatient settings. Lessons learned in recording inpatient data will be valuable in determining success or failure under this upcoming system.

John K. Gorman is president, Managed Care compliance Solutions, Inc., Washington, D.C.

(a.) A list of diagnoses included in each PIP-DCG can be found in HCFA's "Report to Congress: Proposed Method of Incorporating Health Status Risk Adjusters into Medicare Choice Payments," March 1999, at http://www.hcfa.gov/puhforms/rtc_mpc.htm. See pp. 76-78.

EXHIBIT 1
FINANCIAL IMPACT OF DIAGNOSES CODING UNDER PIP-DCGs
"Wastebasket" Diagnoses              Diagnostic Cost Group Diagnoses
* Diabetes with Complications       * Diabetes Ketoacidosis
                                    Uncontrolled
  Not Otherwise Specified ($0)       (DCG 12, about $600)
* Atherosclerosis Unspecified ($0)  * Atherosclerosis of Major Vessel
                                      (DCG 16, about $900)
* Neurotic Disorders ($0)           * Paranoia, Psychoses, Anxiety
                                    Disorders
                                     (DCG 14, about $750)
* Respiratory Distress or           * Congestive Heart Failure
  Unspecified Hypertension ($0)      (DCG 16, about $900)
* Initial Myocardial Infarction     * Subsequent Myocardial Infarction
  (DCG 9, about $360)                (DCG 10, about $450) or Cardiac
                                    Arrest
                                     (DCG 23, about $1,500)