What Is HCC Coding Defined, and Why Is it Important for Providers?

HCC coding is a process that enables healthcare providers to capture accurate data about their patient’s diagnoses and conditions, ensuring they can provide the right treatment solutions and claim appropriate reimbursements.

Medicare and insurance providers use the data submitted through HCC coding to create risk-adjusted scoring, estimate future patient care costs, and determine the complexity of delivering healthcare services to varying patient cohorts.

Gaps in HCC coding, where a healthcare organization has not recorded a diagnosis or failed to recapture a condition from one year to the next, can impact their financial stability and compliance with the CMS payment model.


How Does HCC Coding Work?

HCC coding provides the data needed to assign patient Risk Adjustment Factor (RAF) scores, incorporating contextual and medical information around gender, age, and location, as well as treatments, interventions, and diagnosed healthcare conditions. RAF scores are used to anticipate costs and help to differentiate between patients with the same HCC coding in circumstances where one patient may have multiple health complexities alongside a particular condition, and another has one less severe diagnosis.

This scoring system creates a broad overview of a patient’s health status, evaluating the expected expenditures and creating benchmarks against which to measure the healthcare provider’s cost and quality performance. Within a value-based payment system, these metrics play a core part in revenues, with many using an HCC risk adjustment coder solution to ensure they do not miss coding opportunities and do not fail to recapture a recurring condition, which can affect their reimbursements.

HCC coding must be accurate, consistent with the documentation within the patient’s medical records, and detailed to ensure that the healthcare provider demonstrates good cost and quality performance and meets the targets set. An audit trail of documentation must support any code selected for reimbursement to ensure it is valid and consistent with good billing practices.


How Do Healthcare Providers Select the Appropriate HCC Codes?

Each HCC relates to a specific condition, disease, or process and is linked with a cost of care. Multiple HCCs, therefore, translate into a higher expected cost of care for that patient.

This system breaks down into more than 70,000 ICD-10-CM codes, which signify diagnosis classifications and diseases, and are then sorted into eighty-nine categories. Those categories are then organized into an order of higher and lower risk.

A diagnosis is assigned to an HCC category, which feeds into the RAF scoring process, with some of the most widely used HCC categories related to chronic conditions, such as:

  • Diabetes
  • Rheumatoid Arthritis
  • Congestive Heart Failure
  • Asthma and other pulmonary diseases
  • Bipolar and depressive disorders

All HCC coding practices and the supporting documentation must meet high standards of clinical specificity. The healthcare provider must report this data using an established workflow called ‘MEAT’–monitoring, evaluation, assessment, and treatment.


Why Is Documentation Key to HCC Coding?

HCC coding systems provide the data that calculates the patient’s health risk and the payment rate claimable by the healthcare provider. If there is insufficient documentation or detailed information, the diagnosis code linked with a patient may be inaccurate, impacting the payment rate allocated and the treatment protocols assigned.

The ICD-10 guidelines, published by the CMS,  set out a series of requirements to ensure that all documentation is sufficiently reliable and accurate based on principles of clarity, conciseness, completeness, comprehensiveness, and correctness. Introducing proper documentation processes ensures HCC coding remains accurate, protects the financial viability of the healthcare provider, and assures that the right treatment and care are provided to patients.




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