HCC Coding

How HCC Coding Can Affect Reimbursement and ACO Performance

Risk Adjustment is a method whereby CMS can compensate providers and Accountable Care Organizations for caring for individuals expected to have higher health care costs due to certain health status and demographic characteristics. CMS used hierarchical condition categories (HCC) model to risk-adjust Medicare payments based on their health expenditure risk. For example, those that care for healthy populations are paid less than those that care for much sicker populations.

Providers play a vital role in risk adjustment by documenting and coding all clinically relevant active and chronic conditions that impact the care of their patients.

Accurate HCC coding helps create a more complete picture of the complexity of a patient population, improves the value of the problem list, and enables better management of a patient’s chronic diseases. Documentation and coding that captures the full complexity of the patient often results in appropriately higher reimbursement. For example, when certain conditions co-exist, such as diabetes and CHF, the HCC model provides for an additional payment.

The HCC risk adjustment model uses a patient’s documented 12-month diagnostic coding history to prospectively estimate the cost of caring for the patient in the next calendar year. This means that codes captured in 2017 will determine payment for 2018.

Thorough documentation is essential to being able to report on each patient’s risk adjustment diagnosis, which must be based on clinical medical record documentation from a face-to-face encounter.  All chronic conditions must be monitored and reported at least once each year.  Diagnoses can’t be coded from inferred test results. The easiest way to accomplish the documentation standards for being able to report each patient’s risk adjustment diagnoses is by using MEAT during patient face-to-face visits. MEAT is an acronym used in HCC to ensure that the most accurate and complete information is being documented:

  • Monitor-signs and symptoms, disease process.
  • Evaluate-test results, medications, patient response to treatment.
  • Assess/Address-ordering tests, patient education, review records, counseling patient and family.
  • Treat-medications, therapies, procedures, modality.

HCC Coding Focus Areas

Chronic Conditions

Conditions that the patient has and is expected to have as an ongoing health issue.

  • Chronic conditions need to be documented annually, even when stable with treatment.
  • Document that the condition is chronic.
  • Document severity/stage of condition (i.e. stage IV chronic kidney disease/major depression).
  • Document associated conditions or complications and relationship to the underlying chronic condition (i.e. diabetic neuropathy, cirrhosis secondary to alcoholism)

Active Status

Conditions which are present and unresolved or unlikely to resolve also need to be documented at least annually.  CMS considers the condition resolved if not evaluated and coded at least once/calendar year, in which case the risk factor score for the member is lowered.

Forever Codes

Conditions that do not go away and patients are expected to have forever should be documented at least once a year.

  • Amputation
  • Transplants
  • Alcoholism in remission
  • CHF (compensated)

Possible forever codes – Ostomy, Cirrhosis, Diabetes, Hepatitis, Paraplegia/Quadriplegia – be specific.

Conditions that require 2 codes billed together

  • Diabetic manifestations – retinopathy, nephropathy, neuropathy, etc.
  • Document the causal relationship between the conditions using “secondary to” or “due to” statements and diagnose both conditions (i.e. neuropathy due to diabetes).
  • Hypertensive renal disease – document and code both the hypertension and the renal disease.
  • Infections require documentation and coding for both the type of infection and the organism (e.g. UTI and E. Coli).

Common Underdocumention

For more comprehensive information: Refer to the Health Fidelity Risk Adjustment Documentation and Coding Video.

Source: Health Fidelity Trinity Risk Adjustment Documentation and Coding, 2016

Additional Information

For more information about risk adjustment refer to: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/2015-RiskAdj-FactSheet.

Download and print a HCC tip sheet