HCC coding is a central element of Medicare billing and value-based payments. Like most things in healthcare, the details matter, and understanding how to navigate coding can make all the difference in your revenue cycle.
HCC stands for hierarchical condition categories. It is a form of risk-adjustment coding that attempts to reflect the complexity of severe disease.
HCC coding maps to an ICD-10-CM code and aims to account for serious diseases that may lead to extra medical costs or differences in quality performance. The details have a significant impact on revenue.
Risk Adjustment Scores Affect Payments
Risk adjustments are an integral part of value-based models that pay practices based on performance rather than simply by visit. These models consider cost and quality as part of performance, which means poor attention to HCC codes and risk-adjusted scores can impact revenue.
Missing a code or failing to select the code that reflects the most severe state found in your patient can misrepresent your patient’s health. Patients may appear to have lower quality scores and higher costs than the benchmark, leading to accidental losses for practices.
Similarly, patients can have more than one complex disease, which means more than one HCC code. Diseases are grouped, so you can only choose the best code within that group that represents your patient.
However, all the codes add up to a final risk-adjusted score. Failure to include a disease state leads to inaccurate scores, and, therefore inaccurate performance and payments.
In addition, scores reset every year and you must screen, document, and report accurate diagnoses annually, even chronic diseases or conditions that aren unlikely to change, such as amputation. Assuming it automatically carries over or failing to re-account for coexisting conditions can alter the risk score and push the benchmark downward, affecting payments.
On the other hand, getting HCC coding right has a positive financial impact on your practice. Attention to detail during billing helps you properly reflect the patients you treat and meet cost and quality targets. These practices help you earn shared savings, receive improved reimbursements, boost cash flow, and add financial stability to your business.
A few best practices can help you maximize HCC coding and reimbursements, including documentation, specificity, and continuing education.
Every code you choose must have accurate and active diagnoses to support it. That means your medical records need documentation of the diagnoses and the relevant clinical data. In addition, you must meet face-to-face each year with your patients to re-assess and report these diagnoses.
The mnemonic MEAT can help you remember all the data you need to collect. It goes as follows:
These data points not only lend accuracy and rationale to your decisions but also help foster compliance should you fall under the scrutiny of an audit.
Hierarchical codes reflect the severity of a disease, so the best practice is to select the code that reflects the highest and most specific severity of patient health. Codes should also be in the proper sequence to reflect the patient as a whole.
Consider the following factors:
CMS makes regular changes to HCC codes. As of 2024, the most current version is version 28 or V28. This HCC model has significant structural changes that will affect risk scores, including:
With these changes, many codes for common conditions won’t map to an HCC payment code, which will lower risk scores and reimbursements. Understanding new or proposed changes and how they might affect your case mix, billing, and revenue is essential for stability and financial management.
Modern billing software, such as ChartPath, automates the coding and billing process, lending intelligence, efficiency, and accuracy to your revenue cycle. Coding experts can help you identify the correct codes to reduce billing errors and claim rejections and improve your cash flow. Leverage ChartPath's intuitive software and coding experts to simplify the process and maximize your revenue.