Medicaid Risk Adjustment: Even if Your State’s Medicaid Hasn’t Expanded, Your Risk Adjustment Strategy Should

Abby-Bilyeu-Health-Fidelity-SVP-Client-Development discusses Medicaid Risk AdjustmentManaging Medicaid risk adjustment is almost never a top priority. State by state regulations differ, making it complicated and costly to perform, and it is not often financially worth the trouble. Medicaid risk adjustment is effectively budget neutral, in that the funding is a fixed pool, apportioning dollars between organizations covering those lives based on clinical acuity.  Beyond that, depending on the state, the regulations on how health plans can affect their risk profile varies, making any program that focuses on retrospectively addressing missed or inaccurate codes difficult (if not impossible) to implement. So, outside of payers operating exclusively in states that allow for retrospective Medicaid risk adjustment, it has to be done pre-submission, typically the venue of providers. With that, it becomes a matter of determining how a health plan can help providers completely, accurately, and compliantly code conditions that capture appropriate risk. Doing so can represent a strategy pivot that, until recently, didn’t represent enough incremental value to justify its adoption.

However, 2020 has changed the landscape.

The economic impact of COVID-19 has led to more than 62 million unemployment claims filed, far surpassing the 37 million during the 18-month Great Recession. While many employers used furloughs, allowing non-working staff to retain benefits (health coverage), those programs have run out, as the pandemic has dragged on. That, and working spouse/partner shared health coverage created an initial lag on Medicaid enrollment, but the enrollment wave, compounded with disenrollment freezes in many states, is now hitting. And as the Medicaid population grows, the need to effectively capture risk grows with it, at minimum, to avoid potential losses.

As a result of 2020’s challenges, new enrollees are likely to be younger, healthier, and possibly temporary, depending on economic bounce back. They might not carry a prior risk score with them, or they may have a lower total acuity from not being part of the traditional pool. However, they will still require some level of care, bringing a (likely already depressed) population RAF down, while still increasing costs. Ensuring accurate risk, capturing conditions in the new members as well as dialing in the risk profile of any higher acuity prior members, is the only step to even mitigate that RAF reduction.

This increase in the covered population will increase cost, and if organizations in your state are doing a better job of capturing their Medicaid risk, they will receive a larger portion of the budget-neutral pool. In doing so, their reimbursement will reduce your own, irrespective of the care you deliver, further driving your delta between revenue and cost under Medicaid.

Situations like this are precisely why Lumanent Post Encounter (and Retrospective Review, where applicable) already support Medicaid, with partner organizations experiencing a consistent and substantial ROI by parsing Medicaid data through Lumanent. What was previously a feature available to those that wanted it, but typically overlooked, has become much more important. With Lumanent, nobody has to face the potential loss in revenue from Medicaid enrollment spiking. If your organization is caring for people, the reimbursement can and should be appropriately protected, whether that’s from capturing the conditions of new enrollees, or gaining deeper understanding of prior members.