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Complete ICD-9-CM Coding Is Crucial to HCC Reimbursement

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  • July 1, 2011
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Replace bad coding habits with good ones to get the best possible reimbursement.

By Jacqueline Nash-Bloink, MBA, CPC-I, CPC, CMRS
Hierarchical Condition Category (HCC) coding is a method of determining reimbursement based on the patient’s diagnosis. Generally, the more severe the diagnosis, the higher the reimbursement. HCC coding differs from CPT®-based evaluation and management (E/M) coding, for which the review of systems (ROS), examination, and medical decision making (MDM) are vital when selecting levels of service, each of which is reimbursed at a rate either negotiated between the provider and payer, or based on Medicare’s Resource Based Relative Value Scale (RBRVS).

HCCs: A Brief History

In 1997, as a result of the Balanced Budget Act and the start of Medicare Part C, Medicare beneficiaries were given a choice between the original, fee-for-service (FFS) system or an array of managed care corporations available in each state. Managed care companies (MCC) are given a fixed dollar amount per Medicare enrollee. The MCC may offer certain benefits to entice either the Medicare enrollee or a provider to belong to the program. Some MCC programs offer Medicare beneficiaries better (or additional) benefits than the FFS program. Providers are reimbursed on a different pay scale, as well. Often, the reimbursement will be better than what the Medicare FFS could offer.
MCC plans are reimbursed based the diagnosis codes the provider assigns for each patient enrolled in the plan that uses the HCC, or Risk Adjustment Factor, coding system. HCC coding is based on risk adjustment factors that are tied to ICD-9-CM diagnosis codes. The Centers for Medicare & Medicaid Services (CMS) fully implemented the risk adjustment system in 2007.
The HCC coding system uses approximately 3,100 diagnosis codes and places them in approximately 90 categories (the current ICD-9-CM has over 14,000 diagnosis codes). Each HCC code is given a value. The chosen HCC codes are severe, and usually chronic, diagnosis codes; although, there are some severe, acute codes, as well.

Every Diagnosis Counts

Because payment is based directly on the ICD-9-CM codes assigned, complete provider documentation is essential. Missing even one relevant diagnosis means the MCC will not be reimbursed the full amount allotted for the severity of illness for that particular patient. The provider will not be fully reimbursed, either, due to inaccurate coding. And coding selected for the patient this year also will be used to calculate future CMS payments.

Consider this example of HCC coding:

Mr. X is a 68-year-old male seeing his primary care physician, whom he has been seeing for the last 20 years. The patient is a diabetic with neurological manifestation (peripheral neuropathy/polyneuropathy), and the primary reason for the visit is to discuss his medications with the physician. The patient also has dementia.
Good HCC coding would include all of Mr. X’s diagnosis: 250.60 Diabetes with neurological manifestations, type II or unspecified type, not stated as uncontrolled, 357.2 Polyneuropathy in diabetes, and 294.8 Other persistent mental disorders due to conditions classified elsewhere. Incorrect coding would be anything less, such as the commonly used diabetes code 250.00 Diabetes mellitus without mention of complication, type II or unspecified type, not stated as uncontrolled. Such incomplete coding would affect reimbursement negatively.
Providers are under increased scrutiny from government agencies and private payers looking for inaccurate coding and lack of documentation. Providers must protect themselves with accurate coding and medical documentation—not only for the sake of reimbursement, but because it is ethical and legal.
Jacqueline Nash-Bloink, MBA, CPC-I, CPC, CMRS, is a health care consultant in Tucson, Ariz.

Evaluation and Management – CEMC

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