American Association for Physician Leadership

Strategy and Innovation

The Role of the Physician in Diagnosis, Documentation, and Patient Risk

Theresa Lewis, MPA

February 8, 2018


Chronic conditions are increasing in prevalence in the United States, for a number of reasons. Delivery models and payment systems are changing to address this increase in chronic disease management and the need for greater emphasis on preventative strategies. The transition to risk-based payment systems, which adjust reimbursement based on the complexity and severity of individual patients, requires the development of new workflows and competencies within the physician practice. Successful efforts employ a multidisciplinary team approach to identifying, managing, documenting, coding, and billing chronic conditions.

At a time when most providers and their clinical teams are feeling overwhelmed by patient volumes and workflows on a daily basis, the successful transition to a risk-adjusted payment system will require additional work on the part of providers and their teams. Wherever possible, existing workflows should be optimized before new requirements are placed on providers.

Risk-adjusted payment methodologies recognize the reality that sicker patients require more resources.

The shift to value-based payment systems requires an understanding of new terms and payment concepts as well as the development of new competencies and workflows for managing risk. Physicians, advanced providers, and their teams all know care management is strongly affected by the complexity of an individual patient’s medical and mental conditions. Historically, payment systems to providers have not differentiated payments based on the complexity of an individual’s health status. Risk-adjusted payment methodologies recognize the reality that sicker patients require more resources. In risk-based payment models, accurate documentation of the complexity of the patient’s condition becomes a factor in determining payments to providers.

Responsibility for documentation of patient complexity falls to the physician or advanced provider who cares for the patient. To successfully navigate this shift, an understanding of hierarchical conditions and risk adjustment as well as new competencies and tools are required to support the physician’s documentation and management of patient risk. This article provides an overview of risk adjustment and key considerations for physician practices new to risk documentation.

What is Risk Adjustment?

In 2004, CMS established a system for setting rates for Medicare Advantage plans. These rates involve a process for determining the expected medical resource use (costs) for an individual based on the individual’s chronic disease burden. An individual’s health and demographics become the basis for Medicare Advantage payments. Health expenditures are predicted and payments adjusted based on age and gender (demographic factors) and health status based on documentation of chronic conditions. Each Medicare patient is given a risk-adjusted factor (RAF), which is a combination of a demographic score and the Hierarchical Condition Categories (HCCs) or chronic conditions present, managed, and documented in the patient record.

Chronic diagnoses are categorized into HCCs. Each HCC has an assigned value. The individual demographic RAF is modified by the HCCs documented to achieve a total RAF score, which reflects the patient’s complexity and risk. The total RAF score is used to prospectively determine Medicare payments. RAF scores are re-set to baseline of the patient’s demographic RAF each year. Consequently, active chronic conditions must be redocumented each year by the patient’s provider as those conditions are addressed in managing the patient’s care.

Although the diagnoses documented by providers in physician offices and in hospital inpatient and outpatient settings all contribute to the patient’s overall risk status, much of the responsibility for accurately documenting chronic conditions falls to the physicians and advanced practitioners who practice in the office setting. Payment is prospectively determined by the diagnoses that have been addressed and documented in the patient record and submitted on a claim in the course of a calendar year.

What Does This Mean for the Typical Physician Practice?

Successful patient management in risk-adjusted payment systems relies on the accuracy of the clinical documentation by the patient’s physician or advanced provider. For most practices, there is a need to develop new competencies within the practice in order to effectively manage patient risk. Effective management of the following tasks is fundamental to the successful management of patient risk:

  • Documentation of a patient’s HCCs must result from a face-to-face encounter with a licensed provider (physician or advanced practitioner). The MEAT methodology (monitor, evaluate, assess, and treat) that is familiar to most providers supplies a helpful framework for capturing the action taken in the patient record.

    • Monitoring activities include signs, symptoms, and disease status: progression, regression, or stable.

    • Evaluation activities include review of test results, effectiveness of pharmaceutical management, and observations of the response to the treatment plan.

    • Assessment activities include overall assessment performed, reviewing records, ordering tests, counseling, and discussion.

    • Treatment is provided as necessary by the patient’s provider, whether medications, therapies, procedures, or other modalities, or by referral to a specialist.

  • Education, reporting, and workflows need to be in place to ensure accurate and compliant processes for capturing and managing the severity of chronic conditions.

  • Annual documentation in the medical record of the chronic conditions present is required, because HCC codes drop off at the end of a year.

How Does This Help Patients?

In risk-based reimbursement systems, provider payments commensurate with the predicted care needs of a patient ensure that the resources necessary to manage patient risk are available. If the management of chronic conditions is not documented, or chronic conditions are underreported or not appropriately specific to capture the severity and complexity of patient risk, the practice will not receive the reimbursement needed to ensure adequate resources to effectively manage the patient’s chronic conditions. If documentation accurately captures an individual’s risk, the practice will be better positioned to have the funding needed to provide the array of resources required to manage the chronic conditions, which may include additional resources to better manage patient needs, such as digital monitoring, health coaches, health coordinators, or other ancillary providers. Over time, more proactive management of chronic conditions and preventative services is expected to mitigate clinical risk and decrease the need to utilize more intensive and expensive healthcare services.

For practices in a medical group with a shared medical record, more complete and accurate capture of chronic conditions benefits the entire team of both primary care and specialty providers by providing a comprehensive view of the patient’s chronic conditions. A more complete understanding of patient risk among treating providers will facilitate better care coordination and foster quadruple aim outcomes of patient experience, cost, clinical outcomes, and provider satisfaction.

How Does My Practice Become Proficient in Risk Adjustment?

All practices, regardless of whether or not they are currently participating in risk payment models, should consider the following steps to engage physician and advanced practitioners and prepare all members of the practice team for these changes in the environment.

Physician Champion

Documentation of diagnosis for risk scoring is a provider function that cannot be delegated. A physician or advanced provider must document the diagnosis and related activity in the patient’s chart. Again, the MEAT methodology is a helpful guide. The problem or prescription list, a laboratory test result, or the diagnosis on an encounter form is not sufficient documentation for capturing chronic conditions.

One or more physician champions who are willing to serve in a number of leadership roles are key to the successful transition to a risk-adjusted model. Identify a physician who is respected by peers, who is interested in becoming the physician resource for accurate documentation, and who is willing to invest the time to develop the expertise needed to effectively serve as the champion for change in workflows and documentation. The practice must be willing to make the needed investment in training and support of physician champions as they help lead this value-based transformation.

Physician engagement in the design of education, strategies, and resources will increase the success of the practice’s strategies to adopt a more disciplined approach to documentation and the adoption of standard approaches to managing patient risk.


Education is key. HCC education should build upon ongoing ICD-10 and documentation training and support structure within the practice. Moving to risk-based payment models requires a common understanding of new terms (e.g., RAF and HCC), new workflows, and enhanced documentation and billing competencies. Risk payments depend on what is documented by the provider in the medical record and the diagnosis submitted on claims.

In busy practices, common diagnoses often go undocumented by the provider even though they often are considered in the course of managing a patient. A good example of this is morbid obesity. Even though patient height, weight, and BMI are captured in the record as part of the rooming process, the diagnosis of morbid obesity often goes undocumented in spite of physician and advanced practitioner awareness and consideration of the risks associated with morbid obesity in their management of the patient. Provider education and clinical workflow guidelines to flag lab findings or clinical documentation should be established to ensure accurate documentation of the diagnosis and the action(s) taken.

The practice’s coding staff play an important role in education. They can assist in developing guidelines and resources for the practicing providers who are making the transition to risk documentation. For most practices, the transition to risk-adjusted payment systems requires coders who are willing to take on the additional training to increase their understanding of documentation requirements and accuracy and compliance risks. Developing this expertise will require an investment on the part of the practice to enable the coders to gain this competency, through either training existing staff or hiring coders with this expertise. The efforts of coding staff to share documentation and risk information and to provide guidance to physician and advanced practitioners will be most successful if they are adept at translating these concepts, requirements, and workflows in a practical manner that reflects the daily realities of the ambulatory practice setting.

Education cannot be a one-time event. Education must be coupled with reporting, audits, and coder consultation. RAF and HCC are new concepts as providers continue to work hard to transition to ICD-10. And, for a number of chronic conditions, there are causal relationships that need to be identified, which makes specificity an important part of ongoing training and auditing. Diabetes is a good example. Complications of diabetes are common, including neuropathy, retinopathy, or kidney disease. Where there is an association between two diagnoses, that relationship must be documented in the patient record along with the appropriate diagnosis. Descriptions such as “due to” or “secondary to,” or associative phrases such as “diabetic ulcer” must be in the patient record to substantiate the diagnosis. This is an area where your coding team can serve as a great resource. Organizational resources available for practices seeking educational content include CMS, the American Medical Association, and the American Health Information Management Association.


Practice reporting supports providers and their teams in their efforts to accurately document health conditions and severity. Diagnosis documentation and care gaps, missing appointments, or annual wellness visit reports provide insights into individuals with chronic conditions who may benefit from more attention by the care team. These lists of documentation and care gaps can be used in a variety of ways to ensure conditions are reviewed, managed as necessary, and documented. They can provide insights into care gaps that need to be addressed to ensure clinical risk is appropriately managed and the resulting diagnosis documentation occurs. For example, patients who have presented with diabetic foot ulcers in the past who show up on a report of patients who have not had a timely diabetic foot check present an opportunity to close a care gap, improve patient health status, and capture HCC risk.

The challenge for a busy practice is finding the staff time to review the reports and consult with the physician. Many groups have established centralized teams of nurses to review reports, consult with providers and their teams, and complete appropriate follow-up as directed by the provider.


Billing systems and staff also play a role in the successful capture of chronic conditions. As with your coding staff, your billing team needs to develop expertise in HCC coding. Many claims systems limit the number of diagnoses that can be reported on a claim. It is not uncommon for high-risk patients to have 10 or more conditions that are being managed on a regular basis. If the billing system limits the number of diagnosis on a claim, the efforts of the providers to accurately document all active chronic conditions may not have the intended effect of fully capturing patient risk if HCC diagnoses are not included on the claim form. If this occurs, the patient may appear to have a lower risk score and, commensurately, a lower reimbursement will be paid to the practice.

If you find your practice management system limits the number of diagnoses on a claim, there are solutions you can explore. Working with your practice management vendor to increase the number of diagnoses that pass through to the claim is one option. Another is to work with your Medicare Advantage plans on alternate submissions. This is a periodic process of reporting to the payer diagnoses that are documented in the record but did not show up on a claim form. This reconciliation process closes gaps between the clinical record and billing system. It is important to designate a responsible member of the billing team to lead these reporting efforts on behalf of your chronic patients.


Not only is there financial risk to the practice for failing to effectively manage the accurate documentation of chronic diagnosis, but risk documentation also creates potential compliance risk for the practice. Much of the federal government’s focus on risk score compliance to date has been on the risk coding practices of insurers. Providers can learn from these investigations and implement strategies to ensure that the diagnosis documentation by providers within the practice is accurate and clearly supported by the provider’s documentation in the patient’s progress note. Ongoing education, availability of documentation and coding expertise, and regular audits are the core strategies to ensure providers understand how to accurately document the presence and consideration of a chronic diagnosis.

Electronic Medical Record

Electronic medical record (EMR) reporting capabilities can assist providers in accurately identifying and documenting chronic conditions. These resources may support chart prep workflows to prepare for the patient visit, as previously discussed. In addition, many vendors are working on more robust analytic solutions to support their client’s population health efforts.

Some EMRs are developing systems that prompt the provider during the course of a patient visit to the possible presence of a potential chronic condition requiring attention or a lab or clinical value that indicates an undocumented chronic condition requiring review and assessment. Prompts can support better patient management by addressing preventative and ongoing care management gaps at the point of service.

If you are not aware of your EMR vendor’s plans for risk documentation capture and coding, reach out to your representative to learn more. The ability of your EMR to help providers proactively address documentation gaps facilitates improved management of chronic conditions and the attendant capture of clinical documentation.


At a time when most providers and their clinical teams are feeling overwhelmed by patient volumes and workflows on a daily basis, the successful transition to a risk-adjusted payment system will require additional work on the part of providers and their teams. This reality must be factored into your practice’s plans. A variety of strategies can be considered in determining how to ensure chronic conditions are identified, appropriately addressed by the provider, and accurately documented, while minimizing the additional work placed on the provider. Wherever possible, existing workflows should be optimized before placing new requirements on providers.

Often, appointments are scheduled to address an acute condition, leaving insufficient time for management of chronic conditions. However, annual wellness visits present a great opportunity for the provider to gain a more robust understanding of the patient’s health status and risks. Providers often are surprised by the insights they gain about a patient’s risk factors through annual wellness visits. Many practices continue to be challenged in their efforts to provide this service to Medicare patients. Annual wellness visits present a great opportunity to work with providers and teams to enhance an existing workflow that will result in closure of documentation and care gaps and improve patient care.

Current chart prep workflows should also be reviewed for enhancement opportunities. If a process is not in place to ensure the identification of chronic conditions, both developing such a process and implementing evidence-based protocols will support providers in improving chronic disease management and documentation.


The transition to risk-based reimbursement models creates new work for physician practices. However, for physicians, practice administrators, and staff who have struggled with the lack of time and resources for their complex patients, risk coding can better align resources with patient needs. Managing through the change to risk based payment models takes a multifaceted, multidisciplinary team approach. Building on existing systems, engaging all members of the clinical and administrative team, and providing a supportive environment will ease the transition into this new payment system designed to support a more effective model of managing patient risk.

Theresa Lewis, MPA

Director Physician Practice Consulting, Quorum Health Resources LLC, 1573 Mallory Lane, Suite 200, Brentwood, TN 37027; phone: 515-490-4957; e-mail:

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