Tackling the challenges of bringing risk adjustment in-house

In Affinite Risk, Risk Adjustment by Marketing

Challenge #2: Infrastructure

This is the second in our multi-part series on how health plans can overcome barriers to and reap the rewards of in-house risk adjustment. Click here to read Part 1, dealing with process complexity.

Performing risk adjustment operations in-house is an infrastructure-heavy proposition. It requires teams of analysts, coders and their managers, and provider outreach staff. Beyond staffing, plans that conduct all risk adjustment work in-house need solutions for chart storage and abstraction and encounters submission platforms. Building the capacity required to accomplish this work may seem daunting in terms of cost and effort, but the benefits of investing in the infrastructure  can make meeting the  challenges worthwhile and pay off in terms of improved return on investment (ROI).

Bringing Risk Adjustment In-House Enables Payers To Better Utilize On-Staff Experts

The costs involved in bringing risk adjustment in-house include the hiring and training staff, purchasing an abstraction and coding management solution, and building encounters submission systems. Many organizations pay hefty fees for vendors to conduct this work. Because vendors already have trained staff on board, they have already incurred the upfront costs of establishing the infrastructure to conduct risk adjustment operations. In the short term, it costs less to hire vendors, but outsourcing provides little long-term value. The risk adjustment vendor space is well established, and the major vendors primarily compete on price, the basket of services offered, and the scale of their operations. There is little incentive for these vendors to innovate or tailor their services to the specific, nuanced needs of their clients.

Making Bringing Risk Adjustment In-House Budget Friendly

Companies can overcome the financial challenges of mobilizing  an in-house risk adjustment process by taking a phased approach. 

Phase #1 Encounter Systems Planning

Begin with encounter systems planning. Encounters systems require significant capital investments and often take several years to implement. Getting encounters right is the foundation of a robust risk adjustment program. No amount of prospective or retrospective work will pay dividends if encounter submissions result in excessive erroneous or rejected records.  

Phase #2 Provider Outreach Staffing

Once the encounters system development has been initiated, start hiring provider outreach staff. Building and nurturing direct relationships with providers can facilitate the future work of chart retrieval. Furthermore, as risk adjustment continues to mature in the marketplace, the ROI for retrospective work will decline. More lucrative returns will be realized by investing in the prospective work at the point of care, such as coding completeness and accuracy and implementing EMR best practices around risk adjustment. 

Phase #3 Infrastructure Development

The final phase of building the infrastructure to support risk adjustment operations is establishing chart operations. This encompasses two components: human resources and technology. An experienced coder manager should be the first hire. It is essential that this person be involved in the selection of abstraction software. Abstraction workflow and productivity management are critical aspects of a solid abstraction solution, and an experienced coder manager will know what features are essential. The manager will also serve as  a critical resource for hiring the coding team. In addition to selecting the coding software, the organization will need to establish a method for storing the charts so they can be imported into the abstraction software and retrieved  for future needs, such as a potential RADV audit. 

Value of Risk Adjustment Outweighs “Total Cost of Ownership” 

A robust risk adjustment program requires the commitment of significant time and resources to build software, personnel, and workflow support systems. The long-term value of this decision, however, makes the investment worthwhile. Each health plan is unique with a specific membership, provider network, and market. Plans are much better positioned than vendors to shape work based on these variables. The synergies that come with coordinating this work internally also has the potential to improve ROI beyond what the vendor can accomplish with their scale and breadth of services.

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Peter Janelle
Director of Risk Adjustment Solutions

Peter Janelle has more than a decade of experience in health insurance, having worked both for payers and vendors. He has extensive knowledge of Medicare Advantage finance, including risk adjustment, stars, value-based arrangements, and healthcare economics. Before joining Vital Data Technology, Peter was in charge of risk adjustment operations at UCare, a regional Minnesota insurer with books of business in Medicaid, Medicare Advantage, and ACA.

Peter enjoys photography and outdoor adventure. An annual highlight is his annual winter camping trip to northern Minnesota. 

Peter holds a Master of Public Policy from the Humphrey School of Public Affairs at the University of Minnesota.

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