Guest Column | September 22, 2016

Understanding The RAPS — EDPS Transition And How To Mitigate Revenue Loss

Data Governance, Security Concerns Drive Adoption Of Private Cloud Solutions

By Lisa DiSalvo

Recently, the aim to reform healthcare has focused hospitals, private practices, and other provider settings on improving care quality while reducing costs. Healthcare reform has also driven initiatives such as last year’s ICD-10 implementation, meaningful use incentives, and other clinical and operational improvements.

However, healthcare organizations must also be aware of changes happening outside their segments. For instance, CMS has started the transition from the Risk Adjustment Payment System (RAPS) to the Encounter Data Processing System (EDPS) to establish risk adjusted payments for Medicare Advantage Organizations (MAOs). This transition has the potential to impact reimbursement and revenue flow throughout the industry.

With other initiatives taking center stage for healthcare providers, the RAPS–EDPS transition may not even be on your radar. Due to the additional information required by EDPS, there may be more chances for errors and rejections of submitted codes. These changes could already be affecting MAOs’ revenue. By adopting key strategies, MAOs and downstream affected entities can mitigate their own revenue loss related to this transition.

What Providers Need To Know About The Transition

In a recent Final Call Letter, CMS outlined its incremental RAPS to the EDPS transition plan, which went into effect this year. Beginning in payment year (PY) 2016, CMS will change the calculation for risk adjusted payments to MAOs by using encounter data submitted by MAOs along with RAPS, starting with a phased-in 10/90 percent EDPS/RAPS split. The EDPS percentages will then increase every year as follows:

  • 25/75 percent split in PY2017
  • 50/50 percent split in PY2018
  • 75/25 percent split in PY2019
  • 100 percent EDPS implementation in PY2020

Health plans that encounter challenges with the EDPS system may be experiencing revenue loss due to RAPS–EDPS differences and submission errors. According to an Altegra study, these organizations can expect revenue decreases between 1.8 and 27.6 percent, with an average decrease of 11.9 percent — translating to millions of dollars in lost revenue.

IT professionals within these organizations need to be aware of these issues so they can support their internal customers. Unfortunately, the analytics required to research and close these data gaps is complicated and requires additional resources, so lessening the revenue loss may take some time.

Maximizing Reimbursements During The RAPS–EDPS Transition

For these reasons, it is imperative providers who participate in risk adjustment based gain share arrangements be proactive during this migration. The following are best practices that can be implemented by providers to reduce the potential impact of the RAPS–EDPS transition on MAOs and mitigate reductions in gain share payments.

  • Check your payer contracts. Understand the impact of risk scores on your payments from MAOs. Be able to differentiate the contractual obligations of the MAO that contribute to the risk score payment. Contracts may need to be adjusted to accommodate for the change in risk score methodology and processes that are dependent upon MAO data submission accuracy. 
  • Evaluate your coding and billing practices. MAOs rely on claims data for submission of both RAPS and EDPS. Assure that every claim includes all possible diagnosis codes for the encounter. Many risk scores are artificially decreased resulting from provider billing practices. 
  • Be specific with diagnosis codes and documentation. While accuracy is important, ensuring diagnosis codes are very specific and granular is key to accurate risk scores. This includes drilling down into diagnoses and providing multiple codes for conditions requiring greater detail. Assure documentation supports the diagnosis codes submitted with the claim.
  • Minimize denied claims. Denied claims will not be included in the risk score. Provider organizations can use analytics that prevent denials by enabling them to correct inaccurate or incomplete claims before they’re sent to payers. Analytics can also be used to improve coding practices on the front end of billing.
  • Leverage revenue cycle management (RCM) tools and software. By implementing vendor-supported RCM solutions and services, providers will have the added advantage of working with a partner, who can help them navigate healthcare’s ever-changing regulations and landscape.

Although provider organizations may not be feeling the effects yet, it’s not difficult to imagine how MAO’s lost revenue might impact provider gain share arrangement — now or down the road. Don’t wait to find out. Take action now before the RAPS–EDPS migration affects your bottom line.