The Importance of Documentation and Coding in Risk Adjustment

Thursday, March 8, 2018 | Nicole Knight

The Importance of Documentation and Coding in Risk Adjustment

In our fee-for-service and wRVU-driven worlds, physicians are paid by payors based on the associated CPT codes billed on the claim. The focus on diagnosis coding has been merely to support medical necessity for the services provided for reimbursement. Revenue, compensation and compliance in physician practices focuses on visit and procedural codes only. Aligning current payment-focused billing and documentation practices with evolving risk-adjustment coding, which focuses on diagnosis, will only become more important for all settings.

A shift towards providing more specific, complete documentation and ICD-10 CM diagnosis codes for all applicable conditions on an annual basis will be a challenge. Failing to adequately capture a patient's risk through documentation and coding may lead to an inaccurately low level of attributed risk and eventually to reduced reimbursement, payment penalties and exclusion from markets. Have you thought about how accurate and thorough documentation and coding can provide the best chance of shared savings and, in turn, help with the successful management of your patient population?

Risk adjustment has been around for years. Medicare Advantage plans are already paid partially based on a risk-adjusted factor. CMS varies the payment per patient based on the how sick the whole population of patients is – increasingly important as Medicare uses that diagnosis data for Risk Adjustment under MIPS. The Risk Adjustment Factor (RAF) measures the acuity of a group of patients by age/gender distribution and by diagnosis coding on claim forms. For CMS-HCCs (Hierarchical Condition Category), the total RAF from one year determines the payment during the subsequent years.

Physicians must thoroughly report on each patient’s risk adjustment diagnosis and it must be based on clinical medical record documentation from a face-to-face encounter. One important first step is for physicians to improve documentation by understanding MEAT. MEAT is an acronym used in HCC to ensure that the most accurate and complete information is being documented.

  • Monitor−signs and symptoms, disease process
  • Evaluate−test results, meds, patient response to treatment
  • Assess/Address−ordering tests, patient education, review records, counseling patient and family member.
  • Treat−meds, therapies, procedures, modality

The next step is to focus on ICD-10 diagnosis code assignment to the highest level of specificity. This includes coding for chronic conditions and coding all documented conditions that coexist at the time of the visit, which require or affect patient care or treatment.

In a world where providers consistently have attempted to meet criteria for levels of care for evaluation and management services and procedures, there is now a new documentation need that further illustrates the complexity of care providers deliver. In the ever-changing environment of healthcare with competing priorities, and the volume of information and technology, we need to understand exactly how our payors evaluate the care we deliver. And perhaps more importantly, we need to know how we will be impacted. The schematic below was created to help highlight the importance of documentation and coding.

Documentation and Coding Influence



Documentation and coding is an administrative burden, but it is now critical to a practice’s success. Physician and administrative leaders need to commit to providing the education, training and support to achieve optimum performance. And MedAxiom is here to help you with resources and expertise including a Risk Adjustment webinar on March 22nd.

MedAxiom’s blog post is published every Thursday at



Illustration: Lee Sauer

About the Author
Nicole Knight

Nicole Knight, LPN, CPC, CCS-P, ACS-CA, is Vice President, Revenue Cycle Solutions and Consulting at MedAxiom. Her decades of hands-on health care experience includes cardiology and neurology practice operations, clinical management, business office management, and consulting for coding and compliance. Nicole maintains her LPN licensure in Louisiana and Florida. She is a member of the American Academy of Professional Coders and the American Health Information Management Association. She received her Advanced Coding Certification with the Board of Medical Specialty Coding. Nicole is a certified AHIMA ICD-10-CM Trainer and completed a Lean Sigma Healthcare training course at Johns Hopkins University. She also serves on the Physician Practice Council for AHIMA.

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