HCC Coding: What Is It?
HCC codes support risk-based payment methodologies.
Question: Please explain HCCs and provide some background.
Answer: HCC stands for Hierarchical Condition Categories. HCCs categorize diagnoses codes into groups that are similar clinically and financially. It is a payment methodology based on risk that pays physicians who treat patients with Medicare Advantage Plans or those who gained coverage through the Affordable Care Act’s (ACA’s) Medicaid expansion. This payment method is coming on to the scene quickly.
In 2017, there were approximately 19 million patients who took part in the Medicare Advantage Plan, accounting for approximately 33 percent of all Medicare patients. This number is expected to increase, as enrollees have grown significantly over the past several years. Not only that, but because HCCs and risk adjustment are gaining momentum, look for commercial insurance to also jump on this bandwagon, as payers have done previously with DRGs for inpatient hospital claims and Ambulatory Payment Classification codes (APCs) for outpatient hospital claims.
There are four things to know.
Accountable care organization (ACO) physicians. ACOs are groups of physicians, hospitals, and other providers who come together voluntarily to give coordinated, high-quality care to their Medicare patients and then share in the savings. No longer will these physicians be paid via “fee for service” (based on services and tests performed). Instead, the risk or “disease burden” of the patient will affect payment for Medicare Advantage and ACA patients.
Ideally, the sicker the patient, the higher the payment. This payment methodology identifies patients with serious or chronic illnesses and assigns risk factor scores based on a combination of health conditions and demographic details. These conditions must be addressed, treated, and documented annually, at a minimum.
Patients can be assigned to more than one HCC, with each HCC having its own relative weight (RW) or risk value. These values can change annually. Of course, documentation must support the presence of the condition and indicate the assessment and/or plan for managing the condition.
Coders. Look for more physician groups/ACOs to hire experienced, credentialed coders so that they can optimize their payment. Correct coding is crucial to optimal payment. In many cases, non-specific diagnoses codes are not HCC codes and therefore do not affect risk adjustment scores. Often, it is not a matter of improved documentation, but simply knowing the coding guidelines and coding accurately what already exists in the documentation.
CDI specialists. These professionals focus on a new form of outpatient clinical documentation improvement (CDI). Simply put, better documentation and more specificity has the potential to increase payment. This is common knowledge in the inpatient world and will shift to physician office/outpatient CDI as the number of patients in Medicare Advantage Plans increases.
Health information management (HIM) directors. Many hospital physician practices are taking a closer look at their risk scores. Because HIM departments generally have credentialed coders, this is the first place ACOs look to improve coding, rather than coding by physicians or office managers.
Kim Felix, RHIA, CCS, is vice president of education and training, Intellis.