The Importance of Documentation in Risk Adjustment Coding

What is risk adjustment coding?

Risk adjustment coding is part of a payment model that was mandated by CMS/Medicare Medicaid Services in 1997. This model identifies 79 categories of individuals with serious or chronic illness. These individuals assigned a risk factor score -- called a risk adjustment factor -- based on a combination of their health conditions and demographic details. Each of these risks have specific codes that must be included in a patient’s chart.

Why is risk adjustment coding important?

Risk adjustment coding is used by insurance providers to predict the cost of patient care for the following year. By not properly coding patient risks, you directly impact the funding of these organizations and their ability to pay for patient care. Additionally, as healthcare changes, documentation and coding will play a larger role in physician reimbursement. If you are in an ACO, correct risk adjustment coding can mean increased bonuses.

What role does documentation play in risk adjustment coding?

Proper documentation is the foundation for physician reimbursement and risk adjustment coding. Your physician notes must accurately reflect the patient’s conditions and what happened during the visit. ICD-10 and HIPAA require that, to be subject for reimbursement, a patient’s medical record must explicitly state that you Monitored, Evaluated, Assessed or Treated (MEAT) each condition. Insurance providers monitor your documentation and patient charts may be audited for accuracy.

Who is responsible for correct documentation?

The treating physician is ultimately responsible for all coding. As a result, the physician should review all codes and notes that are input by medical assistants and other staff members.

 How do I match my documentation to the risk adjustment codes?

Very few physicians attended medical school because they wanted to deal with insurance companies! However this is the reality of our healthcare system and the best strategy is to carefully and specifically document each patient visit. EMR systems make it easy to check boxes that do not represent the reality of the patient appointment.

Documentation is much easier if the physician and the staff are properly trained on the EMR system. Most EMRs contain a problem list within each patient’s chart. If this problem list is properly maintained with active conditions, documentation becomes faster and more accurate.

Your risk adjustment documentation must include all manifestations of the disease. Some patients with Type 2 diabetes, for example, have no additional manifestations of the disease. Other patients may have peripheral neuropathy, ulcers on their legs and problems with their vision. In the latter case, both your coding and your notes should specify that the patient has peripheral neuropathy, ulcers on their legs, and problems with their vision.

What is the financial impact of poor documentation?

Poor documentation means that managed Medicare organizations and ACOs may not receive enough funding to adequately treat patients. For physicians who participate in ACOs, poor outcomes related to risk adjustment codes can lead to reduced bonuses.

How can I make sure that my documentation is proper?

If you are audited, your insurance carriers will provide feedback on your documentation. You can also work with a member of the American Association of Professional Coders, who are highly trained specialists in risk adjustment coding, documentation and health care compliance.

About the Author

Nancy Rowe CPC, CPMA, CRC is the Founder and President of Practice Provider Corporation. Her highly-trained staff provide personal and comprehensive medical practice management services – including risk adjustment coding, documentation, and EMR hosting. For more information, please call 1-800-959-6628 or email This email address is being protected from spambots. You need JavaScript enabled to view it..