Hierarchical Condition Categories (HCC), a risk adjustment model that has been around for years, but has heightened visibility since Medicare Advantage Plans started to require RAF scores for reimbursement. Today ever commercial payer and coding leader is the eye for the same.
Risk Adjustment – 101
The Risk Adjustment model uses a patient’s demographics which further diagnoses to determine a risk score, which is a qualified measure of how costly that patient’s treatment is anticipated.
Healthy patients who are below-average Risk Adjustment Factor score from the insurance premium are transferred from healthy patients to patients with an above-average RAF score.
Under this payment model, two patients within the same practice can have a different payment rate. This is due to the variety of factors which determines the amount of risk/work involved to maintain the health of a patient.
CMS uses HCC to compensate Medicare Advantage plans established on the health of their members. It compensates accurately for the anticipated cost expenditures of the patients by adjusting those payments based on demographic information as well as patient as their health status.
The risk assessment information is centered on the diagnosis data drawn from claims and medical records collected by physician offices, hospital inpatient visits and in outpatient settings.
Diseases and conditions are organized into body systems or similar disease processes. The top HCC categories include:
- Asthma and pulmonary disease
- Major depressive and bipolar disorders
- Congestive Heart Failure
- Specified heart arrhythmias
- Breast and prostate cancer
- Rheumatoid arthritis
- Colorectal, breast, kidney
This new risk adjustment identifies patients and establishes the financial allocation offered by CMS towards the twelve-monthly care of every patient.
This new model is established on serious chronic health conditions. Physicians should thoroughly report on every patient’s risk adjustment diagnosis which is based on accurate medical record documentation.
Every detailed diagnosis is used to determine the RAF, therefore the score derived is further used to calculate the reimbursements as well as to know the future cost associated with the patient’s treatment.
The Bottom Line
HCC coding is the great equalizer. Earlier; before the rise of the risk adjustment model, reimbursement was based solely on demographic factors. Since costs are supposed to vary widely in patients, HCC risk adjustment coding can now be widely used to assess patients on the same scale.