Factor HCC with a Two-pronged Approach to Risk Adjustment

By Holly J. Cassano, CPC

Proper hierarchal condition category (HCC) classification depends on a plan’s ability to obtain accurate diagnostic HCC information and report that information accurately to the Centers for Medicare & Medicaid Services (CMS).

If a plan focuses solely on disease management to decrease costs (neglecting to develop an effective HCC strategy), it runs the risk of losing money due to under-reported HCC codes. Although the plan may still save $150-$250 per member, it will be deficient if it does not factor HCC coding into its business model and work aggressively on a two-pronged approach that incorporates both prospective and retrospective HCC capture.

Prong No. 1: Retrospective

A plan generally relies on algorithms (risk adjustment software) to search for unreported diagnosis codes via chart reviews. A plan’s coding staff, or a third-party vendor contracted by the plan, extracts large numbers of charts from network physician offices to capture chronic disease processes. After review, any previously unreported codes are submitted to CMS.

Prong No. 2: Prospective

Plans provide ongoing education to assist physicians in the process of developing a complete and accurate member profile that resonates with all current ICD-9-CM codes identified at each encounter. Taking a prospective approach increases a plan’s ability to capture more accurate data.

Providers must report all diagnoses that affect the patient’s evaluation, care, and treatment, including:

  • Nature of the presenting problem
  • All chronic conditions (such as atrial fibrillation, congestive heart failure (CHF), chronic kidney disease (CKD), rheumatoid arthritis, diabetes with manifestations, chronic obstruction pulmonary disease (COPD), all active cancers)
  • History on any relevant past conditions
  • V codes (factors that influence health/status codes)
  • E codes (external causes of injury and poisoning)

HCC scores on individual members determine CMS reimbursement to the plan. Diagnosis and demographic information should be captured at each face-to-face encounter to obtain a health-based measure of that member’s future medical needs.

Knowledge = Recovered Reimbursement

Consider the following:

  • More than 50 percent of a plan’s revenue comes from captured HCC codes.
  • More than 30 percent of HCC codes do not pass the CMS validation process, due to lack of supporting documentation in the medical record.
  • Providers do not report greater than 40 percent of active chronic conditions.

With those disturbing statistics, it is imperative that a plan employs certified coders who have a thorough understanding of CMS’ HCC methodology and HCC coding process to ensure capture of all documented chronic conditions that risk adjust to HCCs. Coders must also be able to identify documentation deficiencies and review with network providers for improvement.

HCC coding processes include:

  1. Assessments, plans, all active chronic conditions, and diagnosis codes documented in charts annually.
  2. Coding precision and specificity: Coders have the ability to conduct prospective chart reviews to capture missed chronic conditions that have been documented, but not submitted, by the provider or group.
  3. The provider’s ability to submit at least eight diagnosis codes to maximize HCC reporting to plans (CMS has accepted eight diagnosis codes since 2007). You may claim 99080 Special reports such as insurance forms, more than the information conveyed in the usual medical communications or standard reporting form for providers who submit to Medicare Advantage plans to report additional diagnosis codes for chronic conditions. Some providers who use an electronic health record (EHR) may not have the ability within the EHR to submit more than four diagnosis codes to a plan. Code 99080 has no relative value units (RVUs), and may be used as an adjunct to the evaluation and management (E/M) code to capture additional diagnosis codes without skewing the provider’s accounts receivable (A/R) report.
  4. The plan sends to risk adjustment processing system (RAPS) diagnosis codes that are converted to HCC codes.
  5. CMS factors the plan’s risk adjustment.

This process allows plans and providers to deliver better benefits and care. For example, at the plan level:

  • CMS reimburses health plans on a risk-adjusted basis.
  • The sicker a member is expected to be, the more CMS pays a plan.
  • Diagnoses reported in one year affect payments for the next year.
  • Increased reimbursement from CMS (due to better and accurate reporting from providers) allows the plan to provide richer benefits to members for the following year, and allows for bonuses and better reimbursement to providers for fee-for-service (FFS)/capitation models.

Providers also are better able to:

  • Completely and accurately assess member’s health status.
  • Monitor and document all active diagnoses, past illnesses, and status conditions.
  • Monitor readmissions to hospitals.
  • Review medication.
  • Identify potential new problems early.
  • Reinforce self-care and prevention strategies.

Plans that implement a two-pronged approach (prospective AND retrospective) to capture HCC codes will see increased revenue and cost containment through better disease management by including a defined HCC coding initiative. A plan that combines both approaches can potentially increase revenue anywhere from $1,500-$2,500 per member.

The 411 on Third-party Vendors

If a plan chooses to work with a third-party vendor to aid in the retrospective aspect of HCC capture, it should have a checklist clearly defining the plan’s expectations. A vendor’s ability to successfully conduct a majority of the retrospective coding initiatives (the first prong) is imperative, as it allows the plan to focus on prospective coding initiatives (the second prong).

When a plan has a targeted approach to HCC capture, it can better identify high-risk members and channel them into an appropriate disease management program. At the end of the day, when a plan is successful at HCC capture, it creates a win-win outcome for the plan, the providers, and ultimately the members who are served.

Here is a checklist of what a plan should look for in a third-party vendor to assist in retrospective reviews:

  • Vendor has established relationships in physician network
  • Current number of clients: Can the vendor handle your plan’s volume on time to scan appointments and minimize rescheduling?
  • Ability to generate pursuits and set scan appointments
  • Ability to identify what the extractions should or should not include (health care effectiveness data and information set (HEDIS) measures, special needs plan (SNP) forms, progress notes)
  • Flexible chart retrieval services based on the specific needs of the plan
  • Number of scan techs on staff: Does the geographic range and staff support the provider network area?
  • Security and Health Insurance Portability and Accountability Act (HIPAA) compliance—equipment types (for example, flash drives, portable scanners, etc.): Do they bring paper if records have to be printed, so as not to use the provider’s resources?
  • Diverse staff to meet different market needs: Excellent provider and plan relationship skills
  • Ability to view the electronic images of all medical records
  • Number of certified coders on staff (in-house and remote)
  • Ability to generate accurate coding reports based on scans to minimize duplications and errors
  • Ability to code each record using online magnetic resonance angiography (MRA) reporting, capture for diagnosis, or HCC codes
  • Ability to accurately identify areas in the record that support HCC findings and risk adjustment data validation (RADV)
  • Ability to identify provider deficiencies in documentation and coding, and report to the plan on results
  • Annotate the electronically coded record with notes and report generation to assist the plan in targeting deficient providers
  • Year-to-date, month-to-date, and real-time (within the past 30 days) report generation to identify low RAF score providers and providers whose HCC reporting is low in comparison to panel size
  • Ability to identify members who have not had any HCC codes reported from a provider panel
  • HEDIS reporting abilities to assist providers and plan to obtain four- and five-star ratings
  • Pharmacy utilization and facility tracking
  • Ability to identify members who have not been seen and are new to the provider panel within the past six months
  • Turn-around time (TAT) from time of scan to coding, with report generation to the plan
  • A vendor also should provide the plan with a monthly accounting that identifies errors and generates corrective actions from all pursuits. The report should contain at the very least the following:
  • A list of members charts scanned from provider or group
  • A list of charts that were coded from provider or group
  • A list of charts that weren’t coded from provider or group with logic to pursue with provider/group
  • By member, a list of captured HCC or prescription drug hierarchical condition category (RxHCC) codes that can be submitted
  • By member, a list of dropped HCC or RxHCC codes that need to be addressed with the provider or group
  • By member, a list of reduced HCC or RxHCC codes that need to be addressed with the provider or group
  • By member, a list of new HCC or RxHCC codes

Understand HCC Methodology

HCC payment rationale was developed to mirror the individual health risk profile (HRP) of Medicare Advantage members, and uses ICD-9-CM information as the primary indicator to determine a member’s health status. Thousands of ICD-9-CM codes map to less than 100 HCCs, which are what ultimately drive risk adjustment factor (RAF) scores and per member per month (PMPM) premiums paid to a Medicare Advantage plan.

Holly J. Cassano has worked in practice management, coding, auditing, teaching, and consulting for multiple specialties for the past 16 years. She served two terms as an AAPC local chapter officer, maintains an online column for Advance for Health Information Professionals, writes for Justcoding.com, and is the host blogger for: Coding Notes for Consumer Media Network (CMN) www.medicalbillingandcoding.org/blog/welcome-to-my-new-blog/. This past April, she presented at the Third Annual HCC Best Practices for Proactive Medical Management from Generalities to Interventions to Outcomes for Physician Groups and Health Plans, in Jacksonville, via Opal Events. She works for Preferred Care Partners as a CDI specialist, based out of The Villages, Fla and is the founder of ACCUCODE Consulting, LLC (hjcpmg@yahoo.com). You can reach her at  holly@medicalbillingandcoding.org or follow her on Twitter @HollyCassano.


Latest posts by admin aapc (see all)

Leave a Reply

Your email address will not be published. Required fields are marked *