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Risk Adjustment and the Renewed Importance of HCC Coding

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The financial health of many risk-bearing providers hinges on compliance with risk adjustment and hierarchical condition category (HCC) coding directives associated with Medicare Advantage plans and certain Medicaid plans.

Yet amid the pandemic and healthcare labor crisis, many misjudged the scope of keeping up with coding-requirement changes made by the Centers for Medicare and Medicaid Services (CMS) or otherwise found themselves unable to fulfill the demands of consistent, accurate, diagnosis and comorbidity documentation using up-to-date HCC codes. Ultimately, this extends the revenue cycle, tarnishes the patient experience, and places risk-bearing providers at financial risk.

HCC Codes, Risk Adjustment, and the Revenue Cycle

The HCC-risk adjustment model established by the CMS calculates a patient’s risk score — or risk adjustment factor (RAF) — based on the individual’s overall health, present symptoms, and relevant demographic information. The patient’s health conditions are documented with international classification of diseases (ICD-10-CM) codes, which are linked to HCC codes within the CMS’s risk adjustment model.

Patients with higher risk scores generate greater compensation for care due to a high utilization of services provided to manage chronic conditions, but the CMS resets the risk adjustment calendar each year on January 1. At that time, patients with Medicare Advantage and particular Medicaid coverage are considered healthy unless diagnosis codes are detailed anew on reimbursement claims.

CMS routinely administers risk adjustment data validation (RADV) audits to evaluate HCC coding accuracy. As a recent commentary about risk adjustment and HCC coding noted, if the diagnosis documentation for a given patient is inaccurate or incomplete, a provider’s reimbursement for that patient may be deficient; the purpose of the documentation is to capture all chronic conditions to help the CMS understand the utilization of a provider group and discern how sick its patient population is.

It should also be noted that failure to capture diagnosis codes or using incorrect ones can affect reimbursement for multiple parties. For example, if a patient is seeing a primary care physician for a chronic condition but seeing a specialist for another medical concern, incorrect or insufficient diagnosis codes with either provider could impact the patient’s coverage and the reimbursement level for one or both of the providers.

And this potential scaling back of reimbursement is not the only effect of HCC coding on the revenue cycle. Missing codes, incorrect codes or inconsistent codes can lengthen the claims process, delay payment, and increase the need for patient contact.

Incomplete or inadequate codes can also lead to penalties for neglecting to comply with healthcare effectiveness data and information set (HEDIS) standards. If a patient’s chronic conditions are not comprehensively documented, a provider must have the patient return for another face-to-face visit in order to assess, document and diagnose the patient according to standards.

A recent study reported by Health Leaders analyzed dozens of prevention and coordination codes and service categories used for Medicare patients. The research found that a lone primary care physician could add more than $124,000 in preventive services and more than $86,000 in coordination services annually if they resolved coding errors and the subsequent billing problems that stem from inaccurate or incomplete data.

The HCC-Risk Adjustment Model and Value-Based Care

As the healthcare industry moves toward value-based care from fee-for-service, the HCC-risk adjustment model will not be limited to plans like Medicare Advantage and Managed Medicaid.

The model will see growing adoption among commercial and government plans as value-based care becomes more prevalent. In turn, reimbursements from value-based contracts will constitute an increasing revenue segment compared with reimbursements from service-based contracts.

Consider that Medicare Advantage enrollment alone has increased by approximately 10 percent per year for the past two years. About 28 million Americans are enrolled in the Medicare Advantage program, which accounts for 45 percent of the total Medicare population and just over $360 billion in total Medicare spending.

Accurate, consistent diagnosis-code documentation is the foundation for the HCC-risk adjustment model. Underreporting a patient’s diagnosis can cause confusion at other stages of the patient journey and contribute to revenue loss; overstating a patient’s condition through improper use of diagnosis codes, whether accidental or intentional, pose compliance threats and may lead to sanctions.

Organizations can overcome current HCC-risk adjustment obstacles and prepare for the future by developing a strategy that emphasizes accurate, consistent and thorough diagnosis documentation and collaborating with a risk adjustment partner with proven processes, specialized staffing and advanced technology that drives measurable results.

What to Look for in an HCC-Risk Adjustment Partner

The benefits of streamlining HCC coding and risk adjustment processes go beyond providers’ compliance and bottom lines. A recent Health IT Analytics article discussed how precise and efficient HCC coding and risk stratification can enhance patient outcomes.

However, many risk-bearing providers don’t have the financial and human resources to upgrade and link their coding systems and electronic medical record (EMR) platforms. This is where a dedicated HCC coding, risk adjustment and technology partner can be advantageous.

Providers should seek compliance-focused partners whose systems enable precise RAF predictors via accurate HCC coding and intelligent documentation management. Coding professionals should be certified by the American Association of Professional Coders (AAPC) or the American Health Information Management Association (AHIMA).

These medical coders should be adept at not only data capture, but also at performing data validation audits that produce actionable insights. Improved accuracy and efficiency within HCC coding should lead to an increase in RAF scores and related reimbursement growth.

The availability of real-time data-sharing and RAF reporting between patients, providers and payers is another crucial consideration. This helps applicable stakeholders optimize their processes, such as by allowing payers to promptly clear appropriate payments, and provides patients greater transparency into their journeys through a web-based portal.

High-level condition and diagnosis data capture also facilitates the confirmation of existing diagnostic data and the identification of conditions that were not previously captured or updated. For instance, a physician may be alerted to a previously documented condition in a patient’s EMR unrelated to the patient’s visit; the physician can then assess and indicate whether the condition remains active and should be re-documented.

Improving HCC coding and risk adjustment efforts seems like heaping additional responsibilities on overburdened risk-bearing providers at a time when they’re least equipped to deal with significant change. But as the HCC-risk adjustment model expands with value-based care, the right partner can reduce the burden on risk-bearing providers and payers while delivering a cost-effective approach and elevating the patient experience.

About GeBBS Healthcare Solutions: Forward Thinking

GeBBS Healthcare Solutions is a recognized leader in HCC coding and risk adjustment services for risk-bearing providers and payers. GeBBS is committed to our clients’ goals and sustained success. We support our partners with an accomplished team that includes certified coding professionals, audit experts, EMR authorities and IT specialists.

GeBBS is proud to be named as a Leader by Everest Group’s Revenue Cycle Management Operations, one of Black Book Market Research’s Top 20 RCM Outstanding Services, one of Inc. 5000’s Fastest-Growing Private Companies in the United States, one of Market Research’s Top 20 RCM Outstanding Services and one of Modern Healthcare’s Top 10 Largest Revenue Cycle Management Firms. Connect with GeBBS today at gebbs.com to schedule a consultation and demonstration, and see how GeBBS can help you refine your risk management strategies to meet today’s needs and prepare for a brighter tomorrow.

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