The Hierarchical Condition Category (HCC) has been around for quite some time. But it has gained much attention in recent years with more organizations emphasizing the benefits of value-based payment and risk adjustment business models. Without a strong foundation of HCCs, health systems become susceptible to lower reimbursement rates.
HCC coding helps predict a patient’s future healthcare costs by assigning a specific RAF score. It leads to better healthcare for patients, minimizes service disruption, and improves revenue generation for the organization.
If you are considering replacing the old coding system with HCC to get better results for your organization, learn more about it in the following section.
What are HCCs?
HCCs are medical codes linked to certain clinical diagnoses. These codes have been used almost for the past two decades as a part of organizational risk management that identifies and distinguishes patients with chronic or acute conditions. This way, healthcare organizations analyze potential risks and the annual cost of care in the future.
Is HCC coding beneficial?
HCC coding enables getting a clear picture of a patient’s health complexity. The codes, therefore, predict resource utilization and help risk-adjusting cost and quality metrics. It means with an increase in RAF, capitation payment for the beneficiary also increases.
Who can use HCCs?
HCCs aid in calculating payments of patients insured by Accountable Care Organizations, Affordable Care Act plans, Medicare Advantage plans, and others. Typically, clinicians add HCCs to a patient’s medical record with the supporting documentation that the CMS requires.
What conditions are represented by HCC?
HCC codes mostly represent chronic health issues along with some acute conditions. There are about 86 codes arranged in 19 categories, which further comprise several ICD-10-CM codes, each representing a specific health condition.
Some top categories of HCC are bipolar and depressive disorders, pulmonary disease and asthma, specified heart arrhythmias, diabetes, prostate and breast cancer, rheumatoid arthritis, and congestive heart failure.
What are RAF scores, and how is it linked to HCCs?
Risk Adjustment Factor (RAF) scores measure the estimated costs of an individual’s care based on demographic information and disease burden. These scores are then used for calculating payments by healthcare organizations.
Every HCC related to a patient is then assigned to another relative factor and averaged with the demographic score and other factors of the HCC code. After being multiplied by a predetermined amount, this resulting score sets the PMPM capitation reimbursement. Healthier patients usually have low RAF scores, while sicker patients score a lot higher, impacting their payable amount.
Why are HCC coders valuable to an organization?
When you understand how healthcare organizations generate revenues through risk-adjustment contracts that form the basis of value-based care, you realize the importance of HCC coders to your business.
Payers under such contracts use diagnosis codes of patients to evaluate RAF scores. These scores determine the amount allocated to patient care. If there is inaccuracy in determining the patient’s health, or if it fails to capture the complexity of health conditions, you may not receive money to cover patient care costs.
Insurance companies can’t access a patient’s medical records. Hence, HCC codes are the only benchmark for the payers for calculating payments. Therefore, your claim must have HCC codes with the highest levels of specificity, especially in cases of chronic ailments.
Medical coding is a decisive factor in the revenue cycle of the healthcare sector. Therefore, your coding should be secure and accurate to generate healthy revenues and maintain compliance. Unlike any other coding, HCC requires a lot more precision, and when done correctly, you deliver consistent results and earn a good reputation.
