Hierarchical Condition Categories in a Value-Based World

Hierarchical Condition Category (HCC) coding is a payment model implemented by CMS in 2003 to assign a Risk Adjustment Factor (RAF) to individuals with chronic illnesses based upon a combination of their health conditions and demographic circumstances. HCCs are split into categories constructed by cumulative ICD-10 diagnoses that CMS collects via claims. CMS utilizes these codes to predict how healthy your patients are and therefore how expensive they believe your patients will become in the next year. It is important to note that HCCs only recognize ICD-10 codes documented on a patient’s record in the past year, thus it is necessary to consistently document all of your patients’ co-morbidities in order to accurately portray the acuity of your patient population.

Previously, thorough ICD-10 coding was not fiscally nor practically important for the delivery of high-quality care as HCC’s traditionally established the framework to determine Medicare Advantage reimbursements. However, as healthcare evolves to value-based care delivery with consistent population-health management ideologies, HCC coding is vitally important to accurately portray the health of your patient population.  Without thorough ICD-10 coding to capture each and every ailment your patients manage, CMS does not have the information necessary to pay for their care accurately.

In order to best prepare your practice for HCC-related payments, we have highlighted 7 recommendations to keep in mind:

1.       Use the most granular codes when possible. I.E. Bronchitis (ICD-9 code 108) does not carry any additional weight in terms of RAF, however simple chronic bronchitis (ICD-9 491.0) falls under HCC Category 108 with an additional weight of .34.

2.       Eliminate Unspecified Codes from your EHR, when possible.

3.       Verify your clearinghouse reports X number of diagnosis codes. Traditionally, many clearinghouses only “have room” for 4 diagnostic codes, therefore your additional coding on patients’ with 4+ chronic conditions may not flow to CMS.

4.       Stay up-to-date with your coding. As ICD-10 codes should be becoming more familiar, audit your claims to discover common unspecified codes.

5.       Perform annual wellness visits and perform routine chart-audits to ensure diagnostic coding is as comprehensive as your clinical notes delineate.

6.       Prioritize your patients’ problems as you code your patients. Simultaneously ensure conditions remain actively coded. I.E If a patient suffered a heart attack 5 years ago, this should not drop off the medical chart or CMS will not recognize this patient accurately.

7.       Launch a provider engagement initiative. Providers are often astonished to see their patients’ HCC scores are severely inaccurate. (Average error rate nationally is ≈20-30%)

Expect HCC coding to grow in importance as Value-Based Care continues. Investing time and resources into understanding HCC-based reimbursement will prove fruitful under value-based arrangements.

“Can’t Miss” Chronic Conditions

Ø  Atrial Fibrillation

Ø  Amputations

Ø  Chronic Heart Failure

Ø  Chronic Obstructive Pulmonary Disease

Ø  Chronic Kidney Disease

Ø  Diabetes with or without manifestations

Ø  End-Stage Renal Disease

Ø  Major Depressive Disorder

Ø  Malnutrition

Ø  Morbid Obesity (BMI>40)

Ø  Peripheral Vascular Disease

Member Login
Welcome, (First Name)!

Forgot? Show
Log In
Enter Member Area
My Profile Not a member? Sign up. Log Out