The Affordable Care Act (ACA) established a risk adjustment program for all small group, and Individual (commercial) members,  regardless of whether they purchase coverage through an exchange or not. For Medicare Advantage members, the risk adjustment program began in 2000, and was implemented in phases, with implementation complete in 2007.

Risk adjustment is designed to encourage insurers to compete on quality and efficiency, preserve consumer choice and improve quality of care for patients . Risk scores for members are calculated differently for Medicare and commercial members, but the information required from providers and office staff is the same.


Providers play a critical role in helping to ensure the integrity of the data used in calculating the overall health risk of members by providing:

  • A comprehensive health status for each patient
  • Accurate and complete International Classification of Diseases (ICD) coding for every patient, every time.
  • Medical record documentation sufficient to support ICD coding to the highest level of specificity for claim submission

We are committed to improving quality of care through supporting the physician-patient relationship and one way we do this is by encouraging our members to receive comprehensive annual health assessments that include identification of care opportunities and evaluation of disease burden.

Learn more about risk adjustment requirements and data validation audits in the Risk Adjustment section of the Administrative Manual.

Understanding your role in the process

Clinicians, administrators and office staff (e.g., medical coders and billers) all play unique and important roles in the risk adjustment process. Clinicians are responsible for documenting patient encounters in the medical record. Medical coders and office staff members are responsible for coding documentation in a member's medical record and submitting claims for encounters. Administrators are responsible for engaging the process to operationalize improvements for clinical documentation and coding, as well as managing audits.

Documentation and coding best practices

It is critical to understand the ongoing importance of complete ICD coding. In addition to proper reimbursement, accurate recording of health-related data helps to create future possibilities for education and clinical care research. The following steps can help ensure complete diagnosis coding and billing compliance, as well as the detail needed to accurately assess the risk scores of members:

  • Utilize standard medical abbreviations
  • A legible provider name and legible credentials must be included on each note
  • Follow proper medical record documentation guidelines and ICD coding guidelines
  • Sign and credential each chart note either by hand or via electronic health record signature
  • Record the patient's name and date of service, including the year, on each page of his or her chart
  • Update all acute and chronic diagnoses with the current status and treatment plans in the progress notes at least once a year
  • Report diagnosis codes if they were actively monitored, evaluated, assessed or treated (M.E.A.T.) during the face to face encounter (not merely appearing on a problem list)
    • Chronic conditions that are being medically managed should be reported, even if they are not the primary reason for the patient's visit that day. This can be done when reviewing, updating or reconciling the patient's medication list.
    • Contributory and co-morbid conditions should be reported if they impact the ongoing care for the patient and were addressed during the visit, but not if the condition is inactive or immaterial.
    • Diagnoses that are no longer active should be clearly documented as historical in the patient's medical record. This is particularly important for diagnoses such as a history of cancer, heart attack or stroke.
    • Current, chronic conditions that are stable, without acute exacerbation under an active treatment plan should be reported as such. Avoid using the term, "history of" when referring to stable, actively managed chronic conditions. This is particularly important for diagnoses such as chronic obstructive pulmonary disease, atrial fibrillation, Parkinson's disease and diabetes.
    • Ongoing patient status diagnoses such as amputations, ostomies and solid organ transplant status should be evaluated, documented in the medical record and reported at least once a year.

Best practices for claims coding staff

Coding best practices you may wish to adopt include:

  • Hiring an experienced medical coder to manage coding department
  • Provide staff with up to date coding books and/or electronic coding resources
  • Preparing concise reference cards providing convenient and quick notes on key codes
  • Setting quarterly notifications identifying a unique coding issue and opportunity for improvement
  • On the claim, include the ICD code for every diagnosis that was monitored, assessed, evaluated or treated (M.E.A.T.) during the encounter
  • The documentation and coding best practices listed above, which lead to accuracy, specificity, thoroughness and consistency in your practice

Best practices for clinicians

It is important to accurately capture primary conditions as well as presenting co-morbidities, particularly in categories with higher risk implications (e.g., newborns and endocrinology patients). Some best practices you may wish to adopt for your practice include, but are not limited to:

  • Documentation for risk adjustment must be based on a face-to-face encounter
  • Acronyms providing methods to help quickly recall what should go in the medical record
  • Quarterly notifications identifying a unique documentation issue and opportunity for improvement
  • Ensure acceptable facility/provider types, physician specialties, required signatures, provider credentials and document sources
  • The documentation and coding best practices listed above, which lead to accuracy, specificity, thoroughness and consistency in your practice. Use our Risk Adjustment coding and documentation tips for common reference information as well.

Best practices for administrators and practice management

For managing your practice and maintaining a compliant office, some best practices you may wish to adopt to ensure accuracy, specificity, thoroughness and consistency in your practice are:

  • Keep detailed internal review or self-audit documentation
  • Review opportunities to improve clinical documentation and accurate code capture
  • Adopt technologies, such as electronic medical records (EMR) and voice translation software to improve efficiency and accuracy
  • Develop internal repetitive checkpoints for most common documentation and coding errors prior to claim/encounter submission
  • Standardize processes for accurate medical record documentation and coding across clinicians and non-clinicians to minimize disruption to practice flow
  • Utilize tools/resources to identify and remediate incomplete or inaccurate coding (e.g., the ICD coding guidelines or the Office of Inspector General's compliance education materials)
  • Consider using automated steps and/or electronic workflows that have the capability for payer integration to minimize the time spent on medical record retrieval for risk adjustment. Contact Kim Schoon if you are interested in adding this for your practice.

Medical record reviews

We conduct regular reviews of medical records to validate that the diagnosis codes reported are accurate and supported in the medical record. Patient diagnoses do not carry forward from one year to the next under the risk adjustment models, which means that all existing and chronic conditions must be evaluated and documented in the medical record at least once each calendar year for each patient, and the corresponding diagnosis codes must be reported via the claim for services.

Similarly, in any given year, we may be selected for a Risk Adjustment Data Validation (RADV) audit by CMS and/or the U.S. Department of Health and Human Services (HHS), which requires us to provide medical record documentation to validate diagnoses sent for risk adjustment. 

During medical record reviews and RADV audits, we (or a third party we have contracted with to perform a review) follow Health Insurance Portability and Accountability Act (HIPAA) guidelines [45 CFR 164.506(c)(4)] while collecting and coding member information. It is not necessary for you to obtain a specific authorization from the patient to release these records.  Your assistance and timely compliance to such requests enables us to meet our medical record review and collective RADV audit obligations.