UF Health

As a provider group or payor that intends to be successful in the Medicare and Medicare Advantage arena, there are 2 main levers that can be used: an increase in premiums and/or reduction in expenses. These areas are the foundation of shared savings and medical loss ratio (MLR) calculations. Over the last few years, one of these levers has become increasingly easier to move than the other – the Premium. Medicare premium increases have predominantly been driven by improved accuracy and documentation of HCC (Hierarchical Condition Categories) codes due to enhanced EMR (Electronic Medical Record) capabilities and the immense push for capturing and redocumenting these codes. This concentrated effort on risk adjustment has driven profitability for provider groups higher without the need for strong medical expense and disease state management. Enter V28 – the new Medicare Risk Adjustment Model – which is projected to reduce premiums by over 3% and is being phased in over the next 3 years. Not only this, but the model is much more demographics-based, with over 2,000 risk-adjustable diagnoses being reduced from mapping to HCCs and many other HCCs losing weight in the model. We are starting to see a changing of the tides – a true inflection point where the ROI for provider groups and payors will start to shift more towards true medical expense management (i.e., lowered expenses and preventable outcomes) and less towards increasing premiums.

"Where will we see medical expense reductions, and what does this shift look like for provider groups and payors? My forecast is that we will see much more attention in the post-acute and readmission space"

Where will we see medical expense reductions, and what does this shift look like for provider groups and payors? My forecast is that we will see much more attention in the post-acute and readmission space. This will include a shift in human capital away from risk adjustment and more towards the case/care management space - including medical assistants and registered nurses - that are capable of navigating a patient through the complexities post-discharge. Both of these roles are central to the establishment of seamless care transitions through robust transition care management (TCM; CPT 99495-99496) programs. Effective communication between healthcare providers, paired with medication management and reconciliation, forms the foundation of reducing discrepancies and preventing complications post-discharge (in particular with TCM’s there must be a 48-hour phone call post-discharge and also readily available time slots to fit these patients into the schedule). Concurrently, there must be patient education initiatives and innovative technologies to enhance patient understanding of their conditions and foster adherence to post-discharge care plans. The integration of EMRs facilitates health information exchange and interoperability, enabling a comprehensive view of patients' medical histories and treatment plans. Finally, collaborations with post-acute care facilities that is coupled with home health services and remote monitoring - contribute to proactive care, reducing the likelihood of readmission and reducing overall medical expenses.

Overall, I think the shift from risk adjustment maximization to medical expense reduction will be an incredible benefit to all patients around the United States. Both payors and provider groups will be financially incentivized to keep their populations healthy. This ends up being a win for these patients when all parties (payors, providers, patients) have aligned incentives – to keep the patient as healthy as possible. Furthermore, quality improvement initiatives, driven by the analysis of readmission data and risk stratification models, guide targeted interventions for high-risk patients. Timely follow-up care, incentivized through financial models, ensures ongoing monitoring and intervention as needed. By embracing this comprehensive approach, healthcare provider groups aim not only to curtail medical expenses associated with readmissions but also to elevate the standard of care, fostering improved patient outcomes and a more sustainable healthcare delivery system.