Advanced Revenue Cycle Analytics: An Overview

One of the surprise changes in the CMS Final Rule for MIPS in 2018 was that the Cost Measure was included at 10% of the MIPS Composite Score.  The Cost Measure was not included in 2017, and most industry experts projected that it would not be included until 2019.

Quality and Cost will always be the two largest components of MACRA, QPP, and MIPS for the simple fact that this is what CMS cares the most about.  The shift from fee for service to value-based reimbursement emphasizes quality outcomes and cost-effectiveness.  As always, the devil is in the details.

It is very simple to suggest that we want to measure quality outcomes and cost-effectiveness, but not all patients are created equally.  To measure how cost-effective a physician, physician group or hospital operates is very complicated.  Inevitably the more costly providers correctly point out that they often care for the sickest and most complex patients.  This is why Cost Measures under MIPS and Risk-Adjusted Contracts control for patient acuity through HCC Coding.

Understanding HCC Coding is at the heart of understanding risk coding methodology used by CMS and commercial payers for measuring patient acuity and projecting future patient costs.  HCC assigns a numeric weight for demographic and diagnosis factors that result in HCC Score (or RAF score).  The older the patient the higher the HCC score.  The more chronic conditions the patient has, the HCC score and the expected costs to take care of that patient will be higher also.

For 2018 the Cost Measures will be 10% of the final MIPS score for eligible clinicians.  There are also up to 5 Bonus Points available for practices who take care of the sickest patients.  There is no reporting requirement for these measures.  CMS collects and calculates these scores automatically based on claims data.  These Cost Measures are very similar to the Cost Measures calculated under the Value-Based Modifier Program.  If you have not already, it is very helpful to review your current QRUR report to see how your practice performs on Quality Measures relative to your peers.

The challenge that many practices face is that they do a good job documenting patient problems and comorbidities, but do not do a good job coding comorbidities.  There are many reasons that practices struggle coding comorbidities and most of them are due to the fact that coding comorbidities is not required for accurate reimbursement under the current fee for service model.  This means that many practices know that their patients are sicker than Medicare thinks they are.

It is very difficult to accurately project how well your practice will do on the Cost Measures in advance because of the two-step patient attribution process and same year benchmarking.  However, practices who want to ensure that they accurately reflect patient acuity and maximize their MIPS scores under the Cost Measures should make sure that they document and code patient comorbidities and review their most recent QRUR reports.