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HCC Risk Scoring and Value-based Payments: An Overview

There have been a bevy of articles on value-based care over the past decade, and you’ve probably read at least a few of them. Instead of boring you with the same old description, we’re going to focus on a few numbers that show its current state:

  • Over the past five years, there has been a seven-fold increase in the number of value-based care programs across the United States.
  • According to a survey of 450 primary care physicians and health plan executives, 82 percent of respondents believe the transition to value-based care will continue.
  • Value-based reimbursement accounts for almost half of business for major payers and health systems.
  • In a study of health insurance company executives, approximately half said that between 50-75 percent of their current contracts are in value-based models, and the other half plan similar adoption within the next two years.
  • More than half of federal revenues and 28 percent of commercial revenues in 2018 came from a value-based care model with some degree of financial risk. 
  • In a recent Epion Health webinar, 77 percent of webinar respondents report that they are already participating in a value-based payment program.

Many of you are probably already participating in a value-based payment program. Why are they important for the healthcare industry? Because they’ve proven repeatedly that they can generate savings, improve patient health and even increase patient retention. An essential part of these programs, though, is how they’re managed. This is where risk adjustment or scoring comes in.

Reasons for Risk Adjustment

Basically, risk adjustment is a process for compensation. It’s based on the health condition(s) of patients and is utilized by the Centers for Medicare & Medicaid Services (CMS) to ensure health plans won’t turn down enrollees with more complex and therefore costly conditions. One of the primary risk adjustment models CMS uses in figuring capitated payments made to Medicare Advantage (MA) plans focuses on hierarchical condition categories (HCCs).

CMS first introduced the HCC risk adjustment model in 2004 and has been refining it ever since, especially with the shift to value-based payment. Four new HCCs were introduced for 2019.

This model assigns a risk adjustment factor (RAF) and relies on your provider’s ICD-10 codes to map the HCC codes that risk adjust patients based on their health. In total, there are over than 9,500 ICD-10 diagnosis codes which map to CMS’s 83 HCC codes.

HCC models organize the disease process and conditions into body systems and diagnostic groups. The diagnostic groups are then separated into condition categories.

Which healthcare groups are impacted by HCC risk scores? MA plans, health insurance exchanges, commercial health plans (capitations), hospitals and providers. Insurance plans use this model to understand the risk level of patients and predict their costs.

There are six items that create a risk score over which a physician practice has no control. These include a patient’s age and gender, whether they’re dual eligible for Medicare and Medicaid, whether they live in the community versus an institution and if they have end-stage renal disease.

Practical Benefits

Performing HCC risk scoring and coding may seem like a lot of work, but it offers a host of advantages. These include achieving higher reimbursement, helping to achieve financial benchmarks, assisting in the development of programs for population health management to improve outcomes and maintaining a practice’s financial viability.

If you work for a practice that accepts MA plans or is participating in an accountable care organization (ACO), give them a call to find out what you can do to be more successful in the program, and be sure to get a list of the participating patients. Each ACO and MA plan is different and offers bonuses based on certain criteria met, cost savings and/or quality measures reported. In 2018, CMS distributed $780 million in performance payments to ACOs.

If the practice for which you work is already participating in the Comprehensive Primary Care Plus (CPC+) program, you should be intimately familiar with the care management payments you’re receiving based on patient risk. Based on CMS data reports, HCC risk scoring and performance bonuses added $104,000 per year to a CPC+ practice, which proves that risk matters!.This amount doesn’t include the $90,000 average paid in 2018 to each practice in care management fees and $14,000 average performance-based incentive payment.

Proper Documentation

HCC codes must be reported and documented appropriately. A well-documented progress note includes a review of systems (ROS), a history of present illness (HPI), a physician exam and a show of the medical decision process. If you’re interested in learning more about proper chart documentation for HCC risk coding, take a few minutes to view our recent webinar.

Pertinent Technology

It’s no secret that the use of technology is almost essential for healthcare organizations that want to compete with other providers that utilize value-based payment. Athena’s risk score calculator is built into the problem list of each patient’s chart. Be sure to visit your athenaNet O-Help and type in “HCC” to get all of the reports and a user guide for HCC Risk Adjustment.   

Additional Resources

We know this can be a complicated topic, so we’ve compiled the following resources to ensure you have the information you need to be successful using the HCC model:

  1. Run a report of all your patients and their last seen date. If they haven’t been seen in the past year, try to get them in for an appointment.  If they refuse to return to the office, be sure to make them inactive.  
  2. Run your HCC risk factor gap report and ensure there aren’t any gaps in your coding. If there are gaps, look at the charts to find out why. Did the doctor document in the chart but not add the diagnosis to the claim? Did they not document to the highest level? You should be pulling charts at least once per quarter to ensure your providers are supplying the M.E.A.T. Double-check that they aren’t dropping ICD-10 codes without any documentation in the chart, and ensure that if the chart states a patient has diabetes with neuropathy, diabetes with complications is coded. The audit should be going both ways, so codes that shouldn’t be in the chart or current problem list should be removed.
  3. Remember that proper coding and documentation requires lots of time, education and repetition.