Availity Blog

Coding in a Value-Based World: What You Need to Know About Risk Adjustment and HCC Coding


4.26.2017 By Deborah Grider, CPC, CPC-I, COC, CPC-P, CEMC, CPMA, CCS-P, CDIP


Is your revenue at risk? If your hospital or practice isn’t fully adhering to the risk adjustment and Hierarchical Condition Category (HCC) coding requirements for Medicare Advantage (and some Medicaid) plans, the answer may be yes. Many healthcare organizations underestimate what’s required for these plans and it’s costing them money.

What is risk adjustment and HCC Coding?

Risk adjustment and HCC coding is a payment model that uses a patient’s health status and demographic information to calculate a risk score in order to establish a baseline for how much it will cost to provide care to that patient. A patient’s health conditions are identified through ICD-10 diagnosis codes submitted on claims which are mapped to over 70 HCC codes in the risk adjustment model.

The higher the risk score, the more the health plan is compensated annually for providing care to that patient. However, CMS requires documentation of the condition at least once a year. Each January 1, the risk adjustment calendar restarts, and all your Medicare Advantage patients are considered completely healthy until diagnosis codes are reported on claims. CMS regularly conducts Risk Adjustment Data Validation (RADV) audits to ensure accurate HCC coding. If medical record documentation for the patient is incorrect or incomplete, your reimbursement for that patient may be adjusted downward.

How to make sure your code organization is coding correctly

One of the most important things your organization can do to protect revenue is to ensure all providers are documenting comorbidities that affect patient care, even if they are not the primary care physician. There’s a mistaken assumption among some physicians that if they are not seeing a patient for a chronic condition, they don’t need to document it as it doesn’t affect their payment. However, failure to document affects everyone’s reimbursement. If an orthopedist sees a patient for knee surgery and that patient has diabetes, the condition will affect the patient’s care plan and the physician should document that in the medical record.

To maintain accurate documentation, it’s important to make sure physicians are keeping their problem lists updated. Keeping this list current can help to reduce the documentation burden on the physician.

What’s next?

If you are considering participating as a provider in the Medicare Advantage program, make sure to do your research first. Also know that with the transition from fee-for-service to value-based care, risk adjustment models will become more common across all healthcare plans. By emphasizing the importance of consistent, accurate, and complete documentation, your organization will be better equipped to manage the change.

All materials have been prepared for general information purposes only to permit you to learn more about Availity, our services and our experience. The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.

Deborah Grider  is a Senior Healthcare Consultant with Karen Zupko & Associates, a consulting and education firm that has been working with physicians and healthcare organizations to increase revenue, optimize efficiency, reduce risk, and improve the patient experience for more than 30 years.


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