What are HCCs?
Hierarchical Condition Categories (HCCs) are groups of medical codes linked to specific clinical diagnoses. Since 2004, the Centers for Medicare & Medicaid Services (CMS) have used HCCs in a risk-adjustment model to identify individuals with major acute or chronic conditions. This system aids Medicare in forecasting the anticipated risk and future annual cost of care. Each HCC corresponds to diagnoses with similar clinical complexity and expected yearly care expenses.
What Entities Utilize HCCs, and How Are They Implemented?
Healthcare organizations use HCCs to determine payments for patients covered by Medicare Advantage (MA) plans, Accountable Care Organizations (ACOs), and various Affordable Care Act (ACA) plans, among others. Clinicians include HCCs in a patient’s medical record, supported by the necessary documentation as mandated by CMS.
What Spectrum of Conditions Is Encapsulated Within HCCs?
HCC codes cover costly chronic health conditions and certain severe acute conditions. CMS’s reclassification of the model expanded the number of HCC categories from 86 to 115, while reducing the number of ICD-10-CM codes within these HCCs from 9,700 to 7,770. Major HCC categories include:
- Major depressive and bipolar disorders
- Asthma and pulmonary disease
- Diabetes
- Specific heart arrhythmias
- Congestive heart failure
- Breast and prostate cancer
- Rheumatoid arthritis
HCC Coding: The Bedrock of RAF
A Risk Adjustment Factor (RAF) score estimates the anticipated cost of an individual’s care based on their disease burden and demographic data. This score determines payments to healthcare organizations. Each HCC linked to a patient is assigned a relative factor, averaged with other HCC code factors and a demographic score. The risk score is then adjusted using various CMS logic, reducing the beneficiary’s final risk score. The adjusted score is multiplied by a predetermined dollar amount based on the county base rate where the member resides, resulting in the per-member-per-month (PMPM) capitated reimbursement for the upcoming coverage period.
Healthier patients have a below-average RAF, while sicker patients have a higher RAF, affecting the calculated payment amount. Scores are calculated biannually. HCCs significantly influence the reimbursement healthcare organizations receive from CMS. Patients with high HCCs are expected to need extensive medical treatment, and clinicians treating these high-risk patients are reimbursed at higher rates compared to those with low-HCC enrollees. Accurate documentation is crucial for receiving proper reimbursement.
RAF Scores: Their Pertinence to HCCs and Effect on Reimbursement
RAF scores are assigned based on a patient’s diagnosis codes, which map to HCCs and demographic factors. A score of 1.0 serves as the average baseline for assessing an individual patient’s risk. Patients with lower scores are considered healthier and at lower risk, while those with higher scores are considered higher risk, indicating more expensive treatment needs. Accurate coding, especially when multiple HCC categories require assessment, is vital. Inaccurate coding can lead to revenue loss and resource misallocation.
For example, a patient with an RAF of 2.234 who has diabetes with complications should be coded as E11.41 (type 2 diabetes mellitus with diabetic mononeuropathy) under HCC 18, resulting in a higher RAF score and increased reimbursement. Incorrect coding can significantly impact payment amounts and reduce reimbursements.
Driving HCC Excellence through Interdisciplinary Collaboration
Proper HCC coding is crucial in value-based care models and for managing population health effectively. Inadequate capture of a patient’s health and risk profile can lead to reduced reimbursements and poor decision-making regarding interventions and investments. Optimizing HCC coding procedures allows healthcare providers to maximize revenue and secure full reimbursement.
The complexity of HCC coding presents challenges, including incomplete medical records, limited resources, rapidly changing regulations, and the need for effective communication with physicians. Forming a workgroup can help oversee key actions to improve HCC coding accuracy:
- Maintaining an Accurate Problem List: Regularly update EMR problem lists by removing duplicates and inactive diagnoses. Use diagnosis preference lists for HCC codes and RAF values.
- Ensuring Annual Patient Visits: Track patients with chronic conditions lacking yearly visits using a clinical dashboard. Address visit gaps and HCC coding, and review quarterly.
- Improving Decision Support and EMR Optimization: Integrate coding into daily workflows by flagging ACO identifiers, activating decision-support tools, and setting HCC diagnosis alerts for past codes.
- Widespread Education and Communication: Train clinicians on accuracy and the impact of risk adjustment. Educate staff on patient management tools and emphasize risk adjustment’s role in resource allocation.
- Tracking Performance and Identifying Opportunities: Measure and report results like RAF scores and visit rates. Use data to pinpoint improvement areas and review unresolved conditions.
Implementing Chase List Prioritization
Effective chase list prioritization involves targeting the most critical documentation gaps and focusing efforts on high-impact areas. This strategy ensures resources are allocated efficiently to address the most significant issues first, improving overall HCC coding accuracy and financial performance.
Facilitating HCC Advancement: The Role of Risk Adjustment Vendors
A successful risk adjustment partnership hinges on trust and transparency. Set clear expectations for all aspects of the relationship, from fee structures to patient engagement. Transparency is vital, so collaborate on sharing and reviewing key performance indicators, including charts processed, payments posted, submissions, and service adjustments.
Effective communication is another cornerstone of a successful partnership. Establish the frequency and format of communication to ensure alignment from the beginning. With a foundation of trust and clear communication, achieving desired results becomes a natural outcome.
Before selecting a risk adjustment vendor, consider five crucial steps. Vendors incorporating artificial intelligence, NLP, and machine learning are advancing HCC coding accuracy and closing care gaps. However, implementation and training challenges can impact results. Strong vendor support and ongoing customer education are essential for achieving positive ROI and enhancing provider engagement. Strong partnerships lead to higher satisfaction and better outcomes, making consulting services and regular check-ins valuable investments.
Conducting Prospective and Retrospective Audits
Conducting both prospective and retrospective audits is crucial for identifying documentation gaps and ensuring accuracy in HCC coding. Prospective audits help catch issues before they impact reimbursement, while retrospective audits address past discrepancies and provide targeted education for improvement.
Conclusion
Accurate HCC coding is pivotal for fair risk adjustment and optimal reimbursement in healthcare. As the industry shifts towards value-based care, precise HCC documentation ensures that payments reflect the true complexity of patient health. Embracing technology, fostering interdisciplinary collaboration, and leveraging strong vendor partnerships are key to overcoming coding challenges. By prioritizing detailed and accurate HCC coding and implementing effective chase list prioritization, healthcare organizations can enhance both financial performance and patient care, driving success in a value-driven healthcare landscape.
