You may wonder if your healthcare provider uses Hierarchical Condition Category (HCC) coding. So what is hcc coding? Understanding today’s risk adjustment model, this system, also called risk-adjustment coding, is based on chronic health conditions and is used by Medicare to adjust capitation payments. Here, you’ll learn what HCC coding is, how it can affect care, impact your financial health, and the quality of care your patients receive.
Hierarchical condition category (HCC) coding
CMS implemented the HCC coding system to measure risk-adjusted healthcare costs in 2004 for Medicare Advantage plans. The system has been refined and expanded to include risk adjustment for patients in ACOs, Direct Contracting, and Comprehensive Primary Care Plus. The accuracy of HCC coding can have a massive impact on the financial viability of a medical group and its services.
CMS requires healthcare providers to identify a qualifying condition on an annual basis. For that purpose, HCC coding must be done by a physician or APRN who can provide appropriate documentation. The documentation must support the diagnosis. Physicians and APRNs may need assistance in diagnosing patients, especially in the case of complex diseases and conditions that require specialized care. Moreover, HCC coding can affect reimbursement because non-specific diagnoses harm the quality of care.
It’s a risk-adjustment system
Under the Medicare risk Adjustment HCC Coding, the Centers for Medicare & Medicaid Services (CMS) assigns a score to each patient based on the severity of their conditions and other relevant factors. This system is complex and is intended to provide an accurate estimate of the cost of healthcare. However, it pays less for healthy patients and more for unhealthy ones. The system is designed to avoid over or under-billing and encourage better quality and less costly care.
The system uses patient-level demographic and diagnostic information, including diagnosis codes and medical outcomes. This data is derived from the more than 70,000 ICD-10-CM codes and is then grouped into disease hierarchies. In addition, it considers patient Medicaid eligibility to calculate a patient’s risk score. This risk-adjustment system also requires providers to follow the CMS Official Guidelines for Coding and Reporting, the primary guidelines for HCC coding.
It’s additive
The CMS-HCC model is an additive coding scheme that uses multiple diagnoses outside the family to establish a risk score. Multiple HCC scores are added together to determine a member’s risk score. The HCC with the highest severity will be used if a member has more than one disease. However, HCCs that are associated with one disease are also included in the calculation. Therefore, it is crucial to understand the risks associated with multiple diagnoses.
The risk factor should be added to the Medicare risk score and not in the CPT or ICD-10 coding process. This step ensures that each patient is appropriately categorized. However, health plans may still use HCC coding to determine additional benefits for members. Here’s an example of a risk score. The HCC coding process is not easy, but it can make things easier.
It’s based on chronic health conditions
Whether you’re a large hospital or a small physician’s office, analyzing your claims for risk factor scores can help you understand your patients better. Chronic health conditions can negatively impact a patient’s health and lower the value of care. Using risk adjustment HCC Coding can help you understand the nuances of these codes, enabling you to improve your reimbursement rates. This article will explore the importance of chronic conditions and how to identify them.
A risk adjustment factor, or RAF, is a number assigned to patients based on their chronic health conditions. RAF scores are complex formulas that are designed to predict the cost of healthcare. For example, a patient with only one health condition could expect a low medical expense. However, patients with multiple chronic conditions could spend more money and have higher medical costs.
It’s used to reimburse Medicare Advantage plans
The federal government pays Medicare Advantage plans a set amount called a “rebate.” This money is a share of the savings between the government and the plans. The rebate must be spent on lowering patient cost-sharing, reducing premiums, or providing coverage for nontraditional Medicare benefits. These dollars are also used for administrative expenses and profits from providing extra benefits. However, these changes may lead to more spending for Medicare beneficiaries and higher costs.
CMS could increase Medicare Advantage spending by up to $600 billion over the next decade. While some of that money could go toward extra health benefits for patients, two-thirds would go toward increasing the profits of insurance companies. In addition, a trade group representing the industry warns that payments tied to risk scores are a key factor in calculating benefits. As a result, a modest increase in this coding adjustment could prompt a plan to cut benefits or charge more.