Risk Adjusted Hierarchical Condition Category (HCC) Coding

HCC is a payment model created by the Balanced Budget Act of 1997. Implemented by the Center for Medicare and Medicaid Services in 2003, the payment model will identify the individual with chronic illness and assign them to a risk factor score. This risk factor score gives CMS a specific plan out that channelizes the payment method for the risked beneficiaries enrolled. The payment model is different compared to the average amount for Medicare Beneficiaries. Such risk adjustments plans provide rough data that CMS has to make appropriate and accurate payment enrollees with the difference in expected cost.

In simple terms, Risk score will measure the individual beneficiary’s relative risk and Medicare uses them to adjust the payment for each beneficiary on expected expenditure. Using this CMS is able to standardize the base payment to plans based on the risk factor which directly correlates to a basic condition of payment.

The individual health condition is identified via the International Classification of Diseases- 10 (ICD-10).  The diagnosis is submitted by providers on incoming claims. There are more than 9000 ICD-10 codes that map to 79 HCC codes in the risk adjustment model.

The proven success of HCCs in the prediction of resources used for Medicare Advantage enrollees, could now further been implemented into determining the partial reimbursement for Accountable Care Organization (ACO) and Hospital Value-Based Purchasing (HVBP) program. Providers who admit outpatient have assumed the risk for outpatient documentation and coding.  The risk factor score will let providers to accurately capture their patient’s health status they will receive the benefit will failing to do so will not.

Risk Adjustment Affecting Payment

As the provider’s payment is now more dependent on the quality of care. It provides a more impactful solution for the providers to mask-out. Risk Adjustment involves estimating the provider’s performance based on each quality to measure or the expected Medicare allowable charges on each cost measure.

Risk-Adjusted Measure Score= (Actual Performance/ Expected performance) * National Average

Risk Adjustment Process

For the 2017 modifier measure the entail a comparison of the actual performance to the other expected performance. Its implementation differs depending on a different specialty with specific risk-adjustment policy.

HCC Category Description

  1. HIV / Aids
  2. Septicemia / Shock
  3. Opportunistic Infections
  4. Metastatic Cancer And Acute Leukemia
  5. Lung Upper Digestive Tract And Other Severe Cancers
  6. Lymphatic Head And Neck Brain And Other Major Cancers
  7. Breast Prostate Colorectal And Other Cancers And Tumors
  8. Diabetes With Renal Or Peripheral Circulatory Manifestation
  9. Diabetes With Neurologic Or Other Specified Manifestation
  10. Diabetes With Acute Complications
  11. Diabetes With Ophthalmologic Or Unspecified Manifestation
  12. Diabetes Without Complication
  13. Protein-Calorie Malnutrition
  14. End-Stage Liver Disease
  15. Cirrhosis Of Liver
  16. Chronic Hepatitis
  17. Intestinal Obstruction/Perforation
  18. Pancreatic Disease
  19. Inflammatory Bowel Disease
  20. Bone/Joint/Muscle Infections/Necrosis
  21. Rheumatoid Arthritis And Inflammatory Connective Tissue Disease
  22. Severe Hematological Disorders
  23. Disorders Of Immunity51drug / Alcohol Psychosis
  24. Drug / Alcohol Dependence54schizophrenia
  25. Major Depressive Bipolar And Paranoid Disorder

Risk Adjustments Data Flow

Risk Score gives a number on the account of the risk of an individual beneficiary and calculates the payment for each beneficiary expected expenditure. Accurate risk adjustments mean to rely on the diagnosis coding derived from the patient’s medical record. It’s important to capture the events of the entire patient encounter.

The risk adjustment process flow is as follow:

  • The Physician’s Documents On A Patients Visit In Their Medical Record.
  • The Physicians Or Hospital Code The Claim From The Medical Record And Submit The Data To The Payer.
  • The Payer Converts And Sends The Diagnosis Cluster In Risk Adjustment Processing System (RAPS) Format Or Via Data Entry (DDE) To The Front-End Risk Adjustment System (FERAS) At Least Quarterly.
  • The Data Is Checked In FERAS Stage And Last Detail Records Are Checked.
  • If Any Data Are Rejected, Then Data Are Reported On The FERAS Response Report.

Medical Billers and Coders with over 17 years of experience in medical coding and regulation changes, we have a team of experienced revenue managers to promote the revenue of your practice. For more details How Risk adjustments work and Payment model on chronic illness visit our website.