This article is the first of a series of articles by AGS regarding Risk-Adjusted and Hierarchical Condition Category (HCC) Coding. Follow along as we explore the requirements and nuances.
What is the significance of risk-adjustment coding?
Healthcare is transitioning from a fee-for-service model to a value-based care model. One significant piece of the value-based care model involves shifting the financial risk away from payers and to providers. Under this new model, providers will be paid a capitated payment for patient care, and provider organizations will need to manage patients’ costs. As such, providers must have clear, concise, and comprehensive pictures of their patients’ health and medical conditions.
The deployment and refinement of ICD-10 over the last decade have allowed for more detailed coding, providing a more comprehensive picture of patient health. The objective now is to code patient medical records using the ICD-10 code sets accurately.
Risk-adjustment coding is an end-to-end coding system that is used by payers to forecast medical costs by patient, specifically patients with complex medical conditions and multiple chronic conditions. Providers receive higher payer reimbursements for patients requiring more of the providers time due to the complexity of medical conditions under value-based care model.
What is value-based care’s role in risk-adjusted coding?
Value-based care models with capitated payments will continue to grow. Risk-adjustment coding and HCCs help payers forecast annual costs for individuals with complex medical conditions or multiple chronic conditions, creating a capitated annual reimbursement amount under the value-based care model. Again, the financial risk transitions to the providers for patient care. If the provider organizations properly document, align evidence, and code correctly, their reimbursements will be higher.
What is Hierarchical Condition Category (HCC) coding?
HCC coding is a risk-adjustment model, originally created by the Centers for Medicare and Medicaid Services (CMS), to help in forecasting medical costs for patients over 65 with more complex healthcare needs. This is known as the CMS HCC model. The Department of Health and Human Services (HHS) has expanded on this by creating a new model, based on a similar scoring mechanism and category structure but for the general population. This is known as the HHS HCC model. Both models identify patients with serious or chronic illnesses and assign risk factor scores based on health and demographic details.
The CMS model (v24) has 86 HCC group categories. Some of the most common HCCs include:
- Major depressive and bipolar disorders
- Asthma and pulmonary disease
- Diabetes
- Specified heart arrhythmias
- Congestive heart failure
- Breast and prostate cancer
- Rheumatoid arthritis
Of the approximately 70,000 ICD-10-CM codes, about 9,500 of them map to 86 HCC categories.