HCC Coding Audits

Medicare Advantage was created in 1997, and in 2007 the risk adjustment phase in was completed for the participating Medicare Managed Care Organizations (“MCO’s.”) The risk adjusted reimbursement model is based on chronic and cumulative conditions called “hierarchial condition categories (“HCC’s.”)

The historic model for physician reimbursement has been fee-for-service. Doctors get paid for the services they provide to their patients. The CPT codes and their individual relative values essentially drive reimbursement and the ICD-9 diagnostic codes support themedical necessity of those services under this structure. The Medicare Advantage HCC model turns this upside down. With 100% risk adjustment, the ICD-9 diagnostic codes do more than support medical necessity; they now drive CMS’s payments to MCO’s for their Medicare Advantage members.

There are more than 3,000 ICD-9 codes that can adjust risk, but only 70 HCC groups.  Diagnoses are classified into groups to include clinically related conditions with similar cost-of-care ramifications. About 80% of the diagnoses used in the Risk Adjustment Processing System (“RAPS”) originate from the physicians’ claim forms. The RAPS creates a Risk Adjustment Factor (“RAF”) that identify the individual patient’s status. All of this is highly influenced by the historic costs of caring for specific chronic diseases, and payments are based upon the most severe disease manifestation. Comorbidities can have a significant impact on the RAF and HCC determination, and consequently the MCO’s reimbursement.

MCO’s can look backward in the medical recods to correct incomplete coding. This involves reviewing the patients’ medical records to look for documentation that supports any of those 3,000+ previously unreported diagnoses (unreported because they may not have been the medical necessity for a reported service.)

The Coding Network can support your retrospective HCC chart audit program by providing your MCO with the skilled and experienced coders to quickly and cost-effectively reivew your triaged medical records. Importantly, we can provide on-site provider medical record documentation education to train them on thorough and accurate diagnostic coding and the need to see new members quickly to accurately establish their RAF’s. This avoids having to wait a year or longer for the retrospective audits to correct the RAF and underpayment.

Please call 888-CODE-MED to learn more about our HCC audit services.

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