HCC coding is a risk-adjustment model originally designed to estimate future health care costs for patients. The Centers for Medicare & Medicaid Services (CMS) HCC model was initiated in 2004, but it is now becoming increasingly prevalent as the environment shifts to value-based payment models.
HCC relies on ICD-10 coding to assign risk scores to patients. Each HCC is mapped to an ICD-10 code. Along with demographic factors such as age and gender, insurance companies use HCC coding to assign patients a risk-adjustment factor (RAF) score. Using algorithms, insurances can use a patient’s RAF score to predict costs.
For example, a patient with few serious health conditions could be expected to have average medical costs for a given time. However, a patient with multiple chronic conditions would be expected to have higher health care utilization and costs.
Why is HCC coding important?
HCC coding helps communicate patient complexity and paint a picture of the whole patient. In addition to helping predict health care resource utilization, RAF scores are used to risk-adjust quality and cost metrics. By accounting for differences in patient complexity, quality and cost performance can be more appropriately measured. To illustrate, consider these examples:
Example #1: A 68-year-old patient with type 2 diabetes with no complications, hypertension, and a body mass index (BMI) of 37.2
|E11.9||Type 2 diabetes with no complications|
|Z68.37||BMI of 37.2|
|Total Risk = 0.000|
Example #2: A 68-year old patient with type 2 diabetes with diabetic polyneuropathy, hypertension, morbid obesity with a BMI of 37.2, and status post-left below-knee amputation (BKA)
|E11.42||Type 2 diabetes with diabetic polyneuropathy||0.0368|
|E66.01 & Z68.37||Morbid obesity with a BMI of 37.2||0.365|
|Z89.512||Status post-left BKA||0.779|
|Total Optimized Risk = 1.1808|
Appropriate coding can give a more reliable risk score. Try not to use “unspecified” codes. Of note, chronic kidney disease (CKD) stages 1-3 do NOT increase risk – only stages 4-5 and ESRD. If you’d like more information on this topic, call 732-428-7025.