Tag: hcc

CMS-HCC and risk adjustment: everything you need to know

By Vatica Health | December 19, 2024 | Risk Adjustment

Every patient has a story. The question is, are you—as the provider—telling the most important aspects of it, or are you missing critical details? We’re talking about the details that affect the patient’s health status and predict the resources required to care for them—two pieces of information that play a critical role in risk-adjusted payment models.

This article covers some common questions and topics surrounding risk adjustment and HCC coding. It is designed to help providers navigate a changing landscape.

What is risk adjustment in Medicare Advantage?

Risk adjustment promotes fairness and patient access in the Medicare Advantage (MA) program by ensuring that payments to health insurance plans or providers reflect the health status and needs of the individuals they serve. By accurately accounting for the health status of patients, risk adjustment ensures the appropriate funding is available so health plans can cover the cost to address patients’ full burden of illness. Without it, plans might be incentivized to avoid enrolling patients with complex medical needs to reduce costs.

How risk adjustment is calculated in Medicare Advantage

Graphic describes the three-step process involved in risk adjustment. 1. Beneficiaries receive their Medicare benefits via private health plans. 2. The Centers for Medicare & Medicaid Services (CMS) pays these health plans based on the health status of each member. 3. Health status is based on demographic and disease factors. Disease factors are based on the provider coding.

Provider documentation and risk adjustment

The provider—through their documentation—tells the patient’s story using the “language” of ICD-10-CM diagnosis codes. When combined with demographic data and other details, the patient’s health status becomes clearer.

Diagnostic coding plays a critical role in risk adjustment by providing more accurate and comprehensive information about the health status of individuals. If diagnostic coding is inaccurate, it can have significant impacts on providers and their patients:

Financial implications: Under/overpayments or under/overbilling
Compliance issues: Legal liabilities, fines and reputational damage
Compromised care: Incorrect treatment decisions, delays or unnecessary procedures
Healthcare system inefficiencies: Claim denials and payment delays

What does CMS-HCC stand for, and how does it work?

CMS-HCC stands for Centers for Medicare & Medicaid Services-Hierarchical Condition Categories. It is a risk adjustment model used by CMS to adjust payments to MA plans.

Specific ICD-10-CM codes map to specific HCC categories—although not all ICD-10-CM codes map to an HCC category and thus don’t affect risk adjustment. While codes that represent chronic or serious conditions with a significant impact on healthcare costs are represented, the CMS model excludes diagnoses that are vague/nonspecific (e.g., symptoms), discretionary in medical treatment or coding (e.g., osteoarthritis), not medically significant (e.g., muscle strain), or transitory/definitively treated (e.g., appendicitis).

In the CMS model, those conditions that do affect risk adjustment, which are roughly 10,000 out of 70,000+ diagnoses, are grouped into approximately 1,300 diagnostic groups (DXG) that are then aggregated into condition categories (CC). CCs are related clinically and with respect to cost. Hierarchies are imposed among related condition categories. This means that a patient is coded for only the most severe manifestation among related diseases. Hence the term “hierarchical condition categories,” or HCC. HCCs accumulate among unrelated diseases, and the model accounts for interactions between certain conditions for which costs can be exacerbated (e.g., diabetes and congestive heart failure).

The CMS-HCC model uses these mappings to calculate a risk score for each patient, which reflects the expected healthcare costs. This score helps determine the amount of funding provided each month to Medicare Advantage plans. HCCs paint a complete picture of each beneficiary’s acuity to ensure appropriate and accurate funding, effectively managing costs for high-risk members and delivering high-quality care.

Impact of accurate documentation and code capture

Check out the example below that illustrates an $18,500+ difference in payment under the CMS-HCC model based on whether the provider captures accurate diagnoses with maximum specificity.

Graphic illustrates an $18,500+ difference in annual payment under the CMS-HCC model based on whether the provider captures accurate diagnoses with maximum specificity.

Figure 1. Payment by CMS-HCC based on coding specificity

Understand how the CMS-HCC Version 28 Model evolved

A new version of the CMS-HCC model was finalized in 2023 for implementation beginning in calendar year 2024. The new version, V28, replaces the most recent V24. As C MS explains, the existing HCCs that were used in the 2020/V24 model were built using ICD-9 codes, which they had to map to the newer ICD-10-CM codes while waiting for coding practices to stabilize.

For 2024, CMS undertook a CMS-HCC reclassification that involved building new condition categories from the ground up leveraging the increased specificity of ICD-10 coding, reviewing each diagnosis and determining the best grouping of diagnoses. Updating the underlying data and the clinical reclassification is meant to improve predictive ability by better reflecting current disease patterns, treatment methods and costs, and diagnosis and coding practices, says CMS. Some of the noteworthy changes include an expanded number of payment HCCs (115 from 86), changes in ICD-10-CM to HCC mapping (20% fewer codes) and adjustments in coefficient values.

V28 has been phased in over a three-year period. Per CMS: “For CY 2024, risk scores will be calculated as a blend of 67% of the risk scores calculated with the current model (the 2020 model) and 33% of the risk scores calculated with the updated model (the 2024 model). For CY 2025, we expect risk scores to be calculated as a blend of 33% of the risk scores calculated with the 2020 model and 67% of the risk scores calculated with the 2024 model, and for CY 2026, we expect 100% of the risk scores to be calculated with the 2024 model.”

The importance of accurate coding in CMS-HCC V28

Thorough and accurate documentation and coding is always important, but V28 will require even greater specificity in documentation and code assignment. Providers must adapt to the changes to ensure the health and stability of their patients and their practice.

Proper risk adjustment: Accurate coding ensures at-risk entities receive appropriate funding to cover the care needs of their enrollees so they can deliver quality care to patients with complex health conditions.
Financial performance: For healthcare providers and MA plans, precise coding influences reimbursement rates, maintaining financial stability and supporting the sustainability of healthcare services.
Full health picture: Accurate HCC coding reflects the true health status of patients and enables the identification of patients who may benefit from targeted interventions like screenings or medications, ultimately leading to improved patient outcomes.
Compliance: Inaccurate coding can lead to compliance issues, including audits and penalties, undermining a practice’s reputation and impacting its bottom line.
Data health integrity: Reliable data is essential for public health analysis, research and policy-making. It aids in identifying trends, managing population health and making informed decisions.
Benchmarking: Accurate data allows organizations to evaluate their performance accurately, identify areas for improvement and implement strategies to enhance care quality.

CMS-HCC coding best practices

Adhering to best practices ensures compliance, proper risk adjustment and, ultimately, better patient care. Here are some key practices to follow for effective HCC coding.

Perform a valid face-to-face encounter. Note that telehealth visits are considered equivalent to face-to-face interactions and are subject to the same requirements regarding provider type and diagnostic value.
Use the “DSP” acronym as a best practice guide for documentation:
- D: Diagnosis – Refers to the patient’s active medical condition or health issue that is being treated or monitored.
- S: Status – Includes the current signs, symptoms and how the disease or condition is progressing (or regressing).
- P: Plan – Outlines the course of action or treatment plan, which may include medications, procedures, follow-up appointments or lifestyle changes to address the patient’s condition.

Link diagnoses with manifestations using a linking statement or other document.
Add all diagnosed conditions to both the chronic problem list and assessment.
Submit all relevant ICD-10-CM diagnosis codes, including Z codes.
Ensure the medical record includes a legible signature with name, date and credentials
Ensure the diagnoses being billed match the actual medical record documentation.
Always remember the golden rule of medical record documentation.

Optimizing coding with a risk adjustment solution

One way to minimize risk and to increase revenue is to participate in a health plan-sponsored risk adjustment program that helps providers tell the patient’s story as accurately and completely as possible—all while minimizing the impact on staff and internal processes.

What’s behind the move from retrospective to prospective risk adjustment?

By Vatica Health | July 10, 2024 | Provider, Risk Adjustment

Health plans across the country are recognizing the superior value of prospective risk adjustment programs, and rightfully so. These programs have impact at the point of care, as opposed to retrospective programs which are essentially chart reviews. Prospective risk adjustment programs permit timely, effective interventions. This includes presentation of suspected gaps in care and the opportunity to achieve thorough and accurate documentation, which supports coding to the highest degree of specificity.

Conversely, backward-looking retrospective risk adjustment programs limit effectiveness of code capture. A risk adjustment program consisting only of retrospective chart reviews is myopic and does not support the outcomes-driven, population health management focus inherent in most payment models today.

Which one is the optimal approach to risk adjustment? The answer: an effective mix of both. But most important is primary care physician (PCP) engagement. A winning risk adjustment strategy is heavily weighted towards prospective interventions but may need to include some retrospective elements to meet PCPs’ needs.

Prospective programs, while more operationally complex to deliver, are preferred because the ability to impact behavior at the point of care is powerful. It has significant cascading effects, including higher overall value, return on investment and reduced compliance risk. When coupled with PCP engagement, prospective risk adjustment can be the most effective method for obtaining comprehensive insight into the disease burden of a population. Prospective risk adjustment also enables forecasting the cost of care for your Medicare Advantage, Medicaid and commercial lines of business.

PCP engagement is the key to success across all risk adjustment strategies, especially prospective programs. PCP engagement improves care delivery and closes gaps in care by leveraging a proactive approach providing timely clinical and administrative support, education and performance management.

The challenge: Finding a prospective risk adjustment program that engages PCPs

Ideally, health plans and physicians would collaborate to reduce costs and improve health, quality and outcomes. Additionally, members would self-advocate and proactively schedule preventive and wellness visits. Unfortunately, true engagement among all stakeholders in the healthcare continuum is rare and difficult to attain. Physician engagement requires timely, ongoing support. It is essential to augment practices with dedicated clinical resources who curate information to save the physician time by streamlining coding and surfacing gaps in care that require consideration during the encounter.

Furthermore, support staff who provide insights on performance and drive physician engagement are critical. Successful programs supply expertly trained people, easy-to-use technology, turnkey processes and aligned financial incentives to achieve and maintain physician engagement.

Lastly, member engagement is an important piece of the puzzle. Physicians are more likely to engage in programs that drive material clinical improvements for their patients, such as improved outcomes and quality of life.

How Vatica Health can help: Aligning stakeholders around a common goal

Vatica Health is a compliance-first organization that enables a physician-centric approach to risk adjustment and clinical quality. We pair expert clinical teams with cutting-edge technology to work with physicians at the point of care. Vatica Health synthesizes EMR and health plan data to create the most comprehensive and complete view of each patient. We provide comprehensive PCP training as well as 100% clinical coding validation. All unsubstantiated codes are deleted prior to submission of the Vatica record to the health plan sponsor.

Advantages of partnering with Vatica Health

Our licensed registered nurses and administrative staff are dedicated to providing the best experience for PCPs and their office staff. Our attention to documentation and coding validation through Vatica’s quality improvement process improves accuracy and reduces compliance risk. Vatica’s clinical and administrative staff work closely with each practice to develop a custom workflow and process, achieving an ideal state that yields the best results with the least amount of effort for PCPs.

When health plans partner with Vatica Health, they ensure a comprehensive, collaborative and prospective risk adjustment program that’s a win-win for everyone, including patients. To learn more, visit vaticahealth.com.

Another blow to detached health risk assessments

By Vatica Health | June 4, 2024 | Provider, Risk Adjustment, Value-Based Care

By Brian Flower, vice president of client solutions, Vatica Health

Health Affairs recently published a study of data from 4 million Medicare Advantage (MA) members indicating that health risk assessments (HRAs) contributed up to $12 billion per year to risk adjusted payments in 2020. This is based on conditions that were submitted exclusively by an HRA (not submitted through another encounter) during the 2019 calendar year. The study implies that HRAs, typically performed in-home by vendors on behalf of MA plans, can lead to inflated hierarchical condition category (HCC) scores. More specifically, of the 44.4% of MA beneficiaries who had an HRA, HCC scores increased on average 12.8%.

Study authors go a step further by segmenting contracts as low, medium and high, based on the HRA’s effect on risk score at the contract level. This may provide insights into HRA program design by the plan, e.g., which patients are targeted and how HRA outcomes are subsequently attached to care management.

For nearly a decade, the Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG) have expressed concern with the improper use of HRAs to inflate payments, rather than to improve care and outcomes. While HRAs can be a helpful tool for plans to identify all active conditions on an annual basis, the disconnect or “detachment” arises when diagnoses captured in HRAs are not recorded in a subsequent medical visit. This undermines the purpose of risk adjustment, which is designed to compensate plans based on the expected costs of delivering benefits to enrollees.

Key observations

The population was designated as follows: 20% low, 15% high and the remaining 64% in the medium cohort.
While comprising only 15% of enrollees, the high cohort accounts for 48% of the total HRA risk-score increase.
The HRA rate was much higher in the high contracts (77.9%) than low contracts (39.5%).
Quality ratings favored low cohort contracts with 85% 4 stars or better vs high cohort contracts at 56%.
Provider and health system integration was dramatically higher in the low vs the high contract cohort.
Comparing the high and low contract cohorts, while the overall HCC score was 18% higher, medical expense was 9% lower (estimating from the plan payment and medical loss ratio values provided).

Extrapolating on the points above, PCP-integrated risk adjustment solutions drastically reduce the risk of detached HRA outcomes and quality performance. This stands to reason because the patient’s PCP is prioritizing healthcare outcomes and management of chronic conditions, rather than focusing exclusively on code capture.

The correlation between HRAs and coding intensity is particularly relevant given the Risk Adjustment Data Validation (RADV) Final Rule, which authorizes CMS to extrapolate RADV audit findings beginning with payment year 2018, applying the error rate from a sample, and the associated financial penalties, across a broader population of the Medicare Advantage Organization’s contract. In a RADV audit, conditions supported by a single encounter, like detached HRA visits, are at higher risk because there are no additional medical records to fall back on if there is an access, accuracy, or completeness issue with the primary record. A PCP-integrated approach encourages follow-up care and additional documentation to support valid diagnoses.

It should be noted that this study uses the 2020 CMS risk adjustment model. We expect the exclusive impact of HRAs on risk scores would be tempered by as much as 40% using the 2024 risk adjustment model, which is being phased in now and will take full effect for 2025 dates of service.

Conclusion

At-risk entities should evaluate their current risk adjustment programs and focus on solutions that produce accurate and compliant coding accuracy that dovetail with quality and health outcomes. Legacy programs, such as retrospective chart reviews and HRAs completed by in-home assessment vendors, should be augmented with a provider-centric approach. Build a risk adjustment strategy that recognizes PCPs as partners in accuracy and quality capture, as well. PCPs are best positioned to capture all existing conditions and to address the CMS and OIG’s concerns by connecting the dots between accurate HCC capture and improved care and outcomes.

3 major PCP risks in VBC—and how to reduce them

By Vatica Health | December 1, 2022 | Compliance, Risk Adjustment, Value-Based Care

By Lindsay Dosen, senior vice president of legal and compliance, Vatica Health

As more physician groups move into value-based care (VBC), many are encountering risk adjustment compliance issues they aren’t prepared for. Some of these issues can have serious legal and financial consequences if left unchecked. Preparing for these issues will enable physician practices to successfully transition to, and thrive in, a VBC environment by reducing compliance risk, improving patient outcomes and boosting financial performance. This article focuses on three common VBC compliance risks that PCPs should be aware of—along with recommendations on how best to mitigate them.

Risk 1: Unsubstantiated HCC codes

With the traditional fee-for-service payment models that PCPs have historically operated under, health plans—not PCPs—have primarily focused on accurately capturing Hierarchical Condition Category (HCC) codes for purposes of risk adjustment. However, under VBC arrangements (depending on the type of gain-sharing relationship), PCPs must focus on accurately capturing and documenting HCC codes. Underreporting or missing codes could translate to lost revenue for the PCP. Overreporting or submitting HCC codes that are inaccurate or unsubstantiated could subject the PCP to legal liability and regulatory penalties.

While this has been a major issue for health plans in recent years, this is also becoming a significant compliance risk for PCPs, as regulatory agencies have increased scrutiny of the risk adjustment programs and activities of both health plans and healthcare providers. These regulatory actions often assert violations of the False Claims Act (FCA) based on the government’s position that the risk adjustment payments were artificially inflated due to inaccurate or unsubstantiated diagnoses codes. Violations of the FCA can result in multi-million-dollar fines, not to mention lasting damage to a physician group’s public image and reputation, even when the violations were committed in error and without intentional wrongdoing by the PCP.

Fortunately, there are ways PCPs can protect against this compliance risk. First, PCPs should avoid payment structures that base payment on either a higher number of codes or higher-value codes. These types of payment arrangements are construed by the Department of Justice (DOJ) as problematic because they incentivize over coding and upcoding. Second, PCPs should provide training that reinforces the importance of compliant and accurate coding and that educates their staff about the potential legal, regulatory and financial risks associated with submitting inaccurate or unsubstantiated codes. Last, PCPs should invest in compliance programs that review coding and documentation to ensure accuracy.

Risk 2: Improper medical record review and sign-off

Another common VBC compliance issue that PCPs face is medical record compliance. You would think that the Centers for Medicare and Medicaid Services (CMS) recommended medical record review and sign-off process would be simple and straightforward. And it is—but only if the right person is doing it.

CMS outlines specific requirements as it relates to medical record documentation and risk adjustment diagnosis codes. Submissions with documentation issues could impact the validity of the medical record in a Risk Adjustment Data Validation (RADV) audit, leading to a potential discrepancy for the audited CMS-HCC findings. For a diagnosis to be risk adjustment-eligible, it must result from a face-to-face encounter with an approved provider type. The medical record must have, among other things, a valid signature and credentials for the approved provider. For PCPs, that means not just anyone in the practice can sign off on a medical record. A CMS risk adjustment-approved physician must be present during the face-to-face encounter. The record must also be signed by the CMS risk adjustment-approved provider. Learn more here.

This is an issue that can be easily remedied with proper education and training. PCPs should take steps to make sure that their staff clearly understands the importance of following the CMS guidance related to medical record documentation for risk adjustment. PCPs and their teams should read and be familiar with these compliance guidelines and should develop and implement policies and procedures to ensure compliance.

Risk 3: Vendor non-compliance

A third VBC issue is the misconception that a PCP’s responsibility for compliance is limited to only activities within the practice. If a PCP is working with an outside vendor that is non-compliant, the PCP may also be held liable for the vendor’s compliance violations.

The best way to mitigate this risk is to vet prospective vendors thoroughly in advance to ensure they have a clean compliance record and a strong compliance program in place. When selecting a risk adjustment vendor, PCPs should conduct due diligence to include, without limitation, reviewing information about the vendor’s compliance and security programs, any applicable coding policies and procedures, mechanisms for reporting suspected fraud, waste and abuse, exclusion screening, and any prior enforcement or legal actions taken against the vendor. In addition, a thorough review should be completed of the vendor’s operations related to the services being provided, including coding. Finally, PCPs should be thoughtful when structuring any fee arrangements with the vendor so as not to encourage over coding or upcoding. Payments under the arrangement should be based on the scope and quality of the services performed, without fluctuation (including bonuses or penalties) tied to the value or volume of the diagnosis codes captured.

Final recommendation: appoint a compliance lead

These three issues are examples of the compliance risks that PCPs operating in VBC are faced with every day. However, they are also examples of how an effective compliance program can help PCPs successfully navigate these issues and substantially reduce risk in VBC arrangements. An important way to ensure the PCP has an effective compliance program is to appoint a compliance lead for the practice. The compliance lead should stay up to date on compliance requirements and guidelines, develop policies and procedures to ensure compliance, provide training, promote awareness, and monitor and enforce compliance within the organization. An effective compliance program, led by a person with knowledge and expertise related to the compliance risks and regulatory requirements that are applicable to VBC, can greatly mitigate the compliance and financial risks to the practice. With compliance adequately addressed, PCPs can focus on delivering efficient, high-quality care to patients, which leads to successful financial performance in a VBC arrangement.

3 ways health systems can improve care and earn additional income

By Vatica Health | June 10, 2021 | Provider

After an extremely challenging year for healthcare systems, there are now opportunities to improve financial and clinical performance as the country begins to normalize.

In 2020, hospitals and health systems lost at least $323 billion and physicians were stretched to the breaking point. Unfortunately, the burden does not seem to be lightening for primary care physicians. Approximately 40% still feel the same level of strain due to COVID-19 that they felt a year ago. Finding additional ways to generate much-needed revenue, positively impact care, and reengage with patients is more critical now than ever before.

Preventive care services

It’s no secret that patients missed out on preventive care services due to the pandemic. Over the past year, 31% of patients in the United States delayed care and more than 50% of seniors canceled existing appointments. It is imperative to get back on track with preventive and routine care, especially for patients with chronic conditions.

Your physicians and staff should be proactively reaching out to patients, particularly Medicare patients, to schedule appropriate preventive care visits, such as Annual Wellness Visits, immunizations, and various cancer screenings. Scheduling a preventive care visit is a win-win for the patient and the physician. For the patient, it’s typically a no-cost visit that aids in the early detection and prevention of diseases, reduces the exacerbation of existing chronic conditions, and improves overall health and quality of life. For the physician, it’s a great opportunity to reengage with patients, create new revenue streams, and improve outcomes, which is especially important for improving performance under value-based care arrangements.

Health plan incentives

Health plans are eager to collaborate with physicians to achieve coding and quality of care goals. They need data and insights into their members and are willing to incentivize your organization to get it. Many payers offer programs that are free to your physicians and also pay incentives to capture real-time diagnostic coding that enables them to accurately risk-adjust their members. Some of these programs even help take the burden off of physicians and their staff by partnering with organizations that do the majority of the work, and they simplify the workflow by combining coding with preventive care services such as Annual Wellness Visits.

The timing for this could not be better. There is an emerging trend among health plans to shift from home assessments to PCP-centric prospective programs to better risk-stratify their members and address gaps in care. Given the established relationships patients have with their PCPs, prospective programs are often the most effective method for addressing gaps in care and ensuring alignment between medical record documentation and coding to the highest degree of specificity. Prospective programs permit real-time alerts of previously diagnosed conditions as well as those that are suspected. This ability to impact outcomes at the point of care is powerful.

VBC performance

Value-based care is designed to incentivize providers to improve outcomes in a cost-efficient manner. In other words, payment and quality of care are inextricably linked. The combination of driving higher utilization of key preventive care services and improving the accuracy of coding supercharges value-based care performance.

Unfortunately, many physicians lack the tools, resources, and experience to thrive in the value-based care model. Diagnostic coding and quality reporting are labor-intensive tasks and are predicated on a complex set of rules. In addition, EMRs are not equipped with all the necessary functionality and may not contain relevant health plan data, which results in an incomplete patient picture and suboptimal outcomes. Fortunately, there are solutions that include computer-assisted diagnostic coding technology, enhanced quality measure reporting, and clinical decision support at the point of care — all of which enable PCPs to improve outcomes and their financial performance under value-based care arrangements.

As we continue to move toward a new normal, physicians are beginning to see more patients for routine in-office visits, making this the perfect opportunity for patients and physicians to start reaping the numerous benefits derived from a refocus on preventive care and partnering with health plans on in-office programs to improve diagnostic coding and documentation.

Unlocking value-based care performance with improved coding and documentation

By Vatica Health | May 24, 2021 | Provider, Risk Adjustment, Value-Based Care

The transition to value-based care is underway, but many PCPs lack the tools, resources, and expertise to thrive in these new arrangements. For physicians, an essential element of success is being able to accurately assess and report a patient’s clinical needs so that value-based payments will align with the necessary care delivered to that individual. Unfortunately, diagnostic coding with appropriate specificity and quality reporting is labor-intensive and is predicated on a complex set of rules, which frequently become a stumbling block for practices. This dynamic creates a powerful inertia, which can be overcome by understanding the ramifications of inaction and the availability of effective solutions.

Why is documentation so important?

Provider organizations—through their documentation—tell their patients’ stories using the ‘language’ of ICD-10-CM diagnosis codes. Robust documentation and coding provide a comprehensive view of the patient, driving better and more cost-effective care. If documentation is incomplete, patients may not get the necessary care and practices can incur significant shortfalls in revenue. As a result, high quality coding and documentation is no longer just a good practice, but an indispensable element of value-based care success.

The Financial Impact of Accurate Documentation & Code Capture

The example below illustrates how no or partial coding by a physician can result in $15,000 difference in payment under the CMS-HCC model based on whether the provider captures these four diagnoses with maximum specificity: Type 2 diabetes mellitus with a manifestation of stage IV chronic kidney disease, long-term insulin use, and chronic obstructive pulmonary disease.

Improving Coding and Documentation Without Burdening Physicians

According to a 2021 national survey conducted by Medscape that included more than 12,000 physicians across 29 different specialties, 42% of physicians report feeling burned out.

Interestingly, 79% of physicians said this burnout started before the current COVID-19 pandemic with the majority (58%) citing ‘too many bureaucratic tasks’ as the number one reason. This presents a challenging dilemma as business leaders for health systems and physician practices have to balance the reality of physician burnout with the necessity of improved documentation and coding.

Fortunately, there are solutions that drive improved financial and clinical performance without burdening physicians and their staff. Vatica Health is one example. Vatica takes a physician-centric perspective, focusing on minimizing the amount of time and effort required of physicians. Vatica uses a combination of powerful technology along with clinical and administrative resources dedicated to practices. Organizations participating in Vatica’s program realize incremental revenue, better outcomes, increases in the utilization of preventive health encounters (e.g., Annual Wellness Visits), and improvement in overall performance in value-based care arrangements.

Learn how to maximize revenue and results for your organization

Documentation, coding, and revenue: What every physician needs to know about HCCs and risk adjustment

By Vatica Health | March 31, 2021 | Provider, Risk Adjustment

Why does provider documentation matter for risk adjustment?

The provider—through their documentation—tells the patient’s story using the ‘language’ of ICD-10-CM diagnosis codes. Together, these codes create a narrative that includes important diagnostic information. When combined with demographic data and other details, the patient’s health status becomes clearer. Without this narrative, the story is disjointed, confusing, or lost completely. Health plans, CMS, and other treating providers can’t connect the dots when there are only a few dots to connect, or worse yet, a blank page.

If your documentation doesn’t support the ICD-10-CM codes you’ve assigned—or you omit certain codes because no documentation exists—your revenue under value-based contracts could suffer.

Why does coding matter for risk adjustment?

If your coded data indicates subpar performance or that you haven’t met certain performance thresholds, you could be missing out on revenue. Inadequate coding (i.e., missing codes or lack of specificity) also often leads to time-consuming onerous retrospective chart retrieval and reviews as well as compliance risks.

For patients, lack of appropriate ICD-10-CM diagnosis codes can result in poor coordination of care. This is true under all payment models—not just risk-adjusted ones. That’s because documentation and coding are the primary means of communication between care teams. In addition, patients may be omitted from beneficial care management, disease intervention, and other wellness programs if the coded data associated with their records is inaccurate or incomplete. Strong documentation, combined with appropriate ICD-10-CM coding, provides a comprehensive view of the patient. This ultimately helps control the cost of care.

For the purposes of this article, we’ll focus on the Centers for Medicare & Medicaid Services’ (CMS) risk adjustment model.

Not every ICD-10-CM diagnosis code affects risk adjustment under the CMS model. That’s because this payment model excludes diagnoses that are vague/nonspecific (e.g., symptoms), discretionary in medical treatment or coding (e.g., osteoarthritis), not medically significant (e.g., muscle strain), or transitory/definitively treated (e.g., appendicitis).

In the CMS model, those conditions that do affect risk adjustment (which are roughly 10,000 out of 70,000+ diagnoses) are grouped into approximately 1,300 diagnostic groups (DXG) that are then aggregated into condition categories (CC). CCs are related clinically and with respect to cost. Hierarchies are imposed among related condition categories. This mean that a patient is coded for only the most severe manifestation among related diseases. Hence the term ‘hierarchical condition categories’ or HCC. HCCs accumulate among unrelated diseases, and the model accounts for interactions between certain conditions for which costs can be exacerbated, (e.g., diabetes and congestive heart failure).

HCCs paint a complete picture of each beneficiary’s acuity to ensure appropriate and accurate reimbursements, effectively managing costs for high-risk members and delivering high-quality care.

Check out the example below that illustrates a $15,000 difference in payment under the CMS-HCC model based on whether the provider captures these four diagnoses with maximum specificity: Type 2 diabetes mellitus with a manifestation of stage IV chronic kidney disease, long-term insulin use, and chronic obstructive pulmonary disease.

Impact of Accurate Documentation & Code Capture

What are some documentation and coding best practices for busy physicians?

Consider these tips:

Perform a valid face-to-face encounter. As a result of the ongoing impact of the COVID-19 pandemic, synchronous audio and video appointments are, for the time being, acceptable for the purposes of risk adjustment.
Use the ‘MEAT’ acronym as a best practice guide for documentation:
- Monitor: Document signs and symptoms as well as any disease progression or regression. Don’t forget to evaluate chronic conditions at least once annually. Also, avoid use of ‘history of’ if the condition remains active.
- Evaluate: For example, document test results, medication effectiveness, and response to treatment.
- Assess: For example document any of the following, when relevant: Ordering of tests, discussion, reviewing records, and counseling. Copying and pasting the entire problem list into the assessment and plan is unacceptable.
- Treat: For example, document any medications ordered, therapies, or other modalities.
Link diagnoses with manifestations using a linking statement or other document.
Add all diagnosed conditions to both the chronic problem list and assessment.
Submit all relevant ICD-10 diagnosis codes, including Z codes.
Ensure the medical record includes a legible signature with name, date, and credentials.
Ensure the diagnoses being billed match the actual medical record documentation.
Always remember the golden rule of medical record documentation: If it’s not documented, it didn’t happen.

How can physicians minimize compliance risk and benefit from risk-adjustment programs?

One way to minimize risk and to actually increase revenue is to participate in a health plan-sponsored risk adjustment program that helps providers tell the patient’s story as accurately and completely as possible—all while minimizing the impact on staff and internal processes.