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The Balanced
Budget Act (BBA) of 1997 mandated the new change in CMS
(Centers for Medicare and Medicaid Services) payment
methodology
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Prior to the
implementation of risk adjustment, reimbursement was based
solely on demographic factors such as age, sex, Medicaid
status, county of residence, etc. The CPT procedural codes
were the primary key factor that drove CMS revenue.
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Under Risk
Adjustment (RA), CMS’s intent is to pay Medicare
Health Plans and subsequently medical groups
based on the patient’s health status (reimbursement
is higher for sicker patients and lower for healthy
patients). Risk adjustment has evolved from only using
hospital inpatient and outpatient data to
include physician data.
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Now, a
complete diagnosis coding is the primary key factor,
which drives the risk adjustment scores as
well as the reimbursement.ning with 2008
dates of service, CMS will no longer accept family
codes as a risk adjustable code, if it is not coded to the
highest level of specificity. Under this provision, any
diagnosis codes that requires 4th or 5th
digit and is only coded with three digits would be
invalid and rejected (Note: this level of coding
specificity has always been a requirement for standard
fee-for-service Medicare).
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