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.

The concept of risk adjustment was “born” upon passage of the Balanced Budget Act of 1997 and refined by the Beneficiary Improvement Act of 2000, which mandated that the Centers for Medicare & Medicaid Services (CMS) implement risk adjustment for Medicare Advantage organizations (MAOs) in 2004 and achieve 100 percent risk-adjusted payments by 2007. To achieve this, CMS uses the CMS-Hierarchical Condition Category (HCC) model. Risk adjustment has also been adopted by a number of states using other models, such as the Chronic Illness Disability Payment System (CDPS), Episode Risk Groups (ERGs), Diagnostic Cost Group (DCG), and others—mainly because state populations are more diverse than the rather narrow group of Medicare-eligible patients.

Why Should a Coder Care About Risk Adjustment?

CMS requires accurate and complete diagnosis coding, and for all coding to be done in accordance with official guidelines and CMS regulations. If that’s not a good enough reason, think of your patients.

Great documentation and accurate diagnosis data provides information for care management activities, trends in chronic illness among populations, and increased communication among specialists treating the same patient. Conversely, poor documentation and diagnosis coding can lead to missed diagnoses (and lack of treatment), poor communication among treating physicians (leading to duplicate or contradictory treatment), and even incorrect diagnoses (like coding a “rule-out” as a confirmed condition). Incorrect diagnoses can follow a patient for the rest of his or her life and potentially exclude him or her from obtaining life or health insurance in the future.

How Can a Coder Keep Risk Adjustment Models Straight?

Here’s the best news: You don’t have to!

Coding supports all risk adjustment models while documentation and guidelines support coding; but because payment generally revolves around CPT® and HCPCS Level II coding, ICD-9-CM coding tends to be put on the back burner. CMS recognizes this and encourages MAOs to educate coders, physicians, and facilities about the need for correct and complete diagnosis information.

Here’s more good news: Becoming a better diagnosis coder NOW will help you in the transition to ICD-10-CM. The ICD-10-CM guidelines are similar to those for ICD-9-CM, so take advantage of the one-year delay to become a great diagnosis coder.

Here’s how:

1. Read the Official ICD-9-CM Guidelines for Coding and Reporting.
2. Skip the cheat sheets. Use the alphabetic index AND tabular listing every time (even if you THINK you know the code), and follow all of the listed rules.
3. If you need clarification, go to the American Hospital Association’s AHA Coding Clinic for ICD-9-CM.
4. Learn or brush up on anatomy and physiology (A&P) to help you understand when something doesn’t make sense for the condition you’re coding. This will also help you determine when you need to ask the physician to provide more clarity about the condition.

How Can Coders Help Providers Document Dx Better?

Providers who document well are a coder’s dream. Here are some things you can do to make that dream come true:

Make sure all of the required technical elements are present in every progress note. If required elements are not present, the auditor doesn’t have to go any further and can fail the note on a technicality. Required elements include:

• A legible signature with credentials
• Patient name on each page
• Date of service is evident
• Note is complete and legible (meaning someone coming in and auditing this note would not have to ask questions). You don’t want to fail an audit because the note cannot be deciphered.

Print out a few progress notes from your electronic health record (EHR). In many cases, the note you see when you’re coding from the EHR is not the same as the note the auditor sees printed out from your EHR. Audit some notes from the printed version or whatever version you provide to those who request medical records. Look for contradictory information and laundry lists of codes dating back to when the patient was in utero not supported in the documentation on that date of service. Use that information to provide feedback to physicians, managers, compliance officers, or whoever else might need to know in your organization.

Stress descriptive documentation. The Official ICD-9-CM Guidelines for Coding and Reporting, section IV.K, instructs, “Code all documented conditions that coexist at the time of the encounter/visit, and require or affect patient care treatment or management.” Remind physicians that simply listing a condition in the progress note is not necessarily sufficient to support that the condition is current. The progress note must support the diagnoses by showing evidence they were monitored, addressed, assessed, treated, or evaluated. Providing this information not only allows you to capture the diagnosis codes, it can help support medical necessity by showing what, how, and why the listed conditions affected the provider’s medical decision-making during that encounter.

Pay attention also to generic diagnoses such as chronic obstructive pulmonary disease (COPD), congestive heart failure (CHF), pain, and others. Providers are creatures of habit and may default to a generic diagnosis when a more descriptive diagnosis may be more appropriate.

Introduce providers to the golden rule: “Document for others what you would have them document for you.” Remember that every patient they see has probably been seen by another provider at some point and will probably see another provider some time in the future. Just like receiving good documentation with a solid history from the patient’s previous provider is helpful in diagnosing and treating the patient now, their good documentation will help another provider give great patient care in the future.

History versus current condition. When a physician documents “history of,” he or she might mean a condition that is chronic and is being treated, but causing no symptoms. Unfortunately, “history of” to a coder (and an auditor) means the condition no longer exists.

On the other end of the spectrum, many providers will document “breast cancer” to describe a patient who had a mastectomy in 1979 and has had no evidence of recurrence. It would be incorrect to code 174.9 Malignant neoplasm of breast (female), unspecified because there is no evidence of current disease.

Teach providers to document the timing of the disease process clearly so there is no question as to whether it is historical or current.

Rule-outs are dangerous! Rule-outs, probable, or possible diagnoses are not to be coded per outpatient rules. To avoid confusion and give coders something to code, providers should document the symptoms or reason the test is being ordered.

Remind your providers that CODERS MAY NEVER ASSUME. Everything coded needs to be spelled out and supported in the progress note for that date of service. Just because the provider knows the patient has a leg ulcer and that leg ulcer was caused by diabetes does not mean the coder can code it. Causality must be documented clearly in every note on every date of service (for example: “diabetic ulcer on the patient’s right heel”).

Give positive feedback when providers get it right! Providers tend to be high achievers. They are often motivated to provide excellent patient care by making their records complete and meaningful. We all like to receive credit for a job well done.

Serine A. Haugsness, CPC, is a coding analyst at Buckeye Community Health Plan, with risk adjustment and coding education as a primary responsibility. She holds an associate degree in medical billing and coding and has over 11 years of health care experience. Serine is pursuing a bachelor’s degree in health care management.