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Coding Compliance Risks Associated with Hierarchical Condition Categories (HCCs)

Hierarchical Condition Categories (HCCs) have been around since 2004. However, with their increased impact on professional fee reimbursement due to the implementation of MACRA, HCCs have become a hot topic and, therefore, a focus point in every coding arena. Now, physicians will be compensated based on the estimated health cost according to risk profiles, as opposed to the prior fee-for-service methodology they are familiar with. In the historical fee-for-service model, reimbursement was based on the services physicians provided. Payments were thus driven by CPT codes and their relative value.

In the risk factor model, reimbursement is calculated annually based on the patient’s demographics and their chronic conditions (HCCs). As demographics typically remain the same, it is the physicians’ documentation and accurate code assignment in which they can have the greatest impact on future reimbursement. If the coding is accurate, reimbursement from CMS or other payers utilizing HCCs is then accurate based on the patients’ severity of illness.

As such, reimbursement can be negatively impacted for an entire fiscal year without thorough documentation and coding. Therefore, it is critical to physician practices’ financial viability to invest resources into ensuring chronic conditions are being documented and coded comprehensively, according to CMS guidelines.

Below is an example of prevalent, often missed HCCs:

  1. COPD
  2. Rheumatoid arthritis
  3. Ischemic heart disease
  4. CHF
  5. Diabetes with manifestation and/or complications
  6. Vascular disease
  7. Specified heart arrhythmias, including atrial fibrillation
  8. Malignant tumors
  9. Angina
  10. Morbid obesity (BMI>40)
  11. Combination codes (e.g. HTN with CKD, etc.)
  12. Status codes (e.g. colostomy, amputations, dialysis, etc.)

Coding Issues

UASI performs HCC coding, auditing, CDI and education for clients to ensure compliant practices and appropriate reimbursement. We are able to identify areas of concern and make recommendations for improvement in documentation and coding practices.

Below are the top ten coding pitfalls to be aware of related to the identification of HCCs:

  1. Missing documentation to support reporting of factors influencing health status and contact with health services Z00 – Z99 (e.g. long-term use of insulin [Z79.4]).
  2. Highest degree of specificity, including acuity, not documented (Major depression vs. depression, chronic vs. unspecific).
  3. Status of malignancy not clearly described (Current, history of, or in remission).
  4. Chronic conditions not documented annually (The HCC system is prospective and uses patients’ diagnoses from one year to calculate reimbursement for the next year).
  5. Diabetic manifestations and/or complications not documented and/or linked.
  6. Missing documentation for morbid obesity (E66.01) and associated BMI over 40 (Z68.41-45).
  7. Specialist lacking documentation of chronic conditions that are outside their specialty.
  8. Keeping up with coding changes and reporting codes accurately.
  9. Internal claims system not able to report/store all codes (Number limited).
  10. External causes not being documented clearly or being omitted.

Compliance Risks

As experience has taught us, once a code is directly linked to reimbursement, it becomes subject to validation audits and retraction. It is important to know that CMS performs annual targeted audits to validate HCCs, and will calculate each contract’s payment error based on the results. The findings may be extrapolated, resulting in significant payment recovery, so it is important to constantly monitor quality in order to prevent potential penalties.

Having thorough knowledge of CMS guidelines and reporting requirements will assist in complete documentation and accurate code assignment, preventing payment recovery. The reporting requirements include the following:

  1. The medical record is signed with credentials.
  2. The record includes patient’s name, DOB and date of service on every page of the assessment form.
  3. Codes cannot be assigned based solely on diagnoses listed on the problem list, superbill or

medical history without supporting documentation in the chart.

  1. Diagnoses must be clearly documented and cannot be interpreted from lab reports or assumptions based on medications the patient is currently on.
  2. Clinical documentation must pass the MEAT criteria (monitored, evaluated, assessed or treated) in order to be coded. If documentation does not meet the MEAT criteria, it will not stand up to validation in the event of a risk adjustment data validation (RADV) audit.

In conclusion, it is important to reflect on the impact this reimbursement methodology shift can have on the quality of services being provided to the patient population. To assure proper resource allocation, it is essential that documentation and coding are accurate, timely and complete, resulting in a true reflection of care quality and correct reimbursement from CMS and other payers.


HCC Coding: 10 Tips for Top Scores

Top 10 Medicare Risk Adjustment Coding Errors

The Medicare Advantage HCC Program How to Optimize Your Coding

HCCs: Easy as 1,2,3 (the culture of MEAT)


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