HCCs and Coding for Value: A Virtual Roundtable

Why Risk Adjustment Opens the Doors of Opportunity

“Risk adjustment isn’t a disruption—it’s simply the next progression for coding professionals.”

– Rose Dunn

Hierarchical Condition Categories (HCCs) are utilized by Medicare Advantage and Affordable Care Act payers for approximately 30 million individuals currently. Use of HCCs is projected to grow significantly in coming years and individuals with in-depth knowledge and command of the HCC system will be needed to ensure coding is accurate, supported by documentation, and that reimbursement is appropriate. We asked six experts what they thought about the challenges and opportunities provided by the accelerating move toward risk adjustment payment models.

PARTICIPANTS

Rose T. Dunn
MBA, RHIA, CPA, FACHE, Chief Operating Officer, First Class Solutions, Inc.

Laurie M. Johnson
MS, RHIA, FAHIMA, Senior Healthcare Consultant, Revenue Cycle Solutions, LLC

John Murphy
MBA, Principal, Risk Adjustment Consulting

Lisa A. Eramo
MA, moderator and freelance writer

Bonnie S. Cassidy
MPA, RHIA, FAHIMA, FHIMSS, President of Cassidy & Associates

Donna Malone
CPC, CRC, Director of Coding and Provider Education, Enterprise Risk Adjustment, Tufts Health Plan 

Earshler Taylor
RHIA, RHIT, CCS, CDIP, CPC-I, COC, CPC, Chief Executive Officer, Earshler Taylor Consulting

MODERATOR: Will HCCs ‘disrupt’ the coding industry and take it in a completely new direction?

“Risk adjustment isn’t a disruption—it’s simply the next progression for coding professionals.”

-Rose T. Dunn

DUNN: Risk adjustment isn’t a disruption—it’s simply the next progression for coding professionals. In some ways, the writing has been on the wall. In 1988, Congress had extensive discussions about a diagnosis-driven reimbursement system with episodic-based payment rendered to the most significant provider of care. At the time, this goal was unachievable because hospitals were the only provider that reported an ICD-9-CM diagnosis code. Fast forward to today, and all providers submit diagnosis codes. Even skilled nursing facilities are moving to a diagnosis-based payment as of October 1, 2019. Providers are also more coordinated than they ever have been in the past thanks to Accountable Care Organizations (ACO) in which entities come together to provide the total continuum of care for patients.

“…with value-based payments, physicians can’t rely on uncredentialed staff to assign diagnosis codes. There’s too much at stake for the physician and the organization at large.”

-Bonnie S. Cassidy

CASSIDY: It’s not a ‘disruption’ per say because HCCs are rooted in ICD-10-CM. As the healthcare industry continues to make the monumental shift from volume- to value-based payment, HCCs will play an increasingly essential role in a hospital’s financial viability. What’s different is that physician practices will need to employ skilled, credentialed CDI specialists and coders. This is a big change. For years, physicians focused primarily on CPT codes to support fee-for-service reimbursement. Now, with value-based payments, physicians can’t rely on uncredentialed staff to assign diagnosis codes. There’s too much at stake for the physician and the organization at large.

MALONE: I don’t think HCCs have disrupted the coding industry per say, and I don’t think they will unless and until physician compensation is based solely on diagnosis codes rather than Relative Value Units (RVU). Until this happens, physicians will likely continue to focus on the CPT code and only document the reason for the visit. They won’t capture all of the other conditions that are present.

TAYLOR: ‘Disrupt’ is a strong word, though I do believe that any time a regulation affects the way in which physicians document, the coding industry must adapt accordingly. In many cases, outpatient coders will assign far more codes than they ever did in the past, and they’ll also take on a new task: querying for diagnoses.

MURPHY: Some of the disruption has already happened. Medicare Advantage plans started using CMS HCCs in 2004. HHS HCCs came a decade later. However, we’ve yet to move the needle on physician reimbursement. With physicians, diagnosis codes have always been secondary to procedure codes. With risk adjustment, though, diagnoses are directly linked to revenue. Over-reporting HCCs (e.g., reporting conditions that are resolved [e.g., cancer] or reporting conditions that aren’t supported by clinical indicators) can also lead to costly takebacks and penalties. The ‘disruption’ may come once physician payments are aligned with HCCs.

“How can we keep patients out of the hospital or provide care at a less expensive site? HCCs help us accomplish these goals.”

-Laurie M. Johnson

JOHNSON: Clearly things are changing. We’ve been in the DRG world for 37 years this October, and now we’re shifting to a payment methodology that looks at the patient holistically. How can we keep patients out of the hospital or provide care at a less expensive site? HCCs help us accomplish these goals.

MODERATOR: What HCC training will coders need to be successful?

“All coders need knowledge of HCC classifications, HCC guidelines, payment vs. nonpayment HCCs, and trumping logic.”

-Rose T. Dunn

DUNN: Four words: Anatomy, physiology, pharmacology, and pathophysiology. Coders also need to know ICD-10-CM really well, including how to maximize specificity (e.g., severity, laterality, and chronicity). Approximately 10,000 of the 75,000 or so ICD-10-CM codes are considered HCCs. Many unspecified codes simply aren’t recognized for payment in risk adjustment methodologies. In addition, half of the HCCs are also CCs or MCCs. This is good news for inpatient coders, but for ambulatory coders, it’s a whole new world.

All coders need knowledge of HCC classifications, HCC guidelines, payment vs. nonpayment HCCs, and trumping logic (i.e., the most significant subcategory in a hierarchy trumps others in that hierarchy). They also need education about HCC documentation requirements—the 10 principles of CMS HCCs and the RAD-V medical record review guidelines. For example, coders may not know that when reporting CMS HCCs, they can only code from a CMS-approved provider’s documentation. Nurses and dieticians don’t qualify. In a non-HCC environment, coders can capture body mass index from a dietician’s documentation and wound care levels from a wound care nurse’s documentation. Documentation used to validate HCCs must also include patient name, date, and provider signature (including credentials).

Finally, ambulatory coders need training around how and when to pose a compliant physician query for HCCs. For example, if a coder sees documentation stating a surgeon is creating a special diet plan, is that because the patient has diabetes? If the surgeon requests a larger surgical table, is that because the patient is obese? These are HCCs that add value in risk-adjusted payment models, and physicians need to note them in their documentation.

CASSIDY: Physician practice and ambulatory coders will need training on the documentation requirements for reporting an ICD-10 diagnosis code because diagnosis coding may be new to them. They’ll also need the ability to identify and address areas of HCC compliance risk within their practice (e.g., omitted diagnoses, mis-using the phrase ‘history of’ for active conditions, or not establishing a causal relationship between two diagnoses).

“…all coders need annual refresher training on the coding guidelines rather than relying solely on encoders to assist with coding.”

-Donna Malone

MALONE: There’s a big knowledge gap for many coders with pathophysiology, anatomy, and physiology as well as pharmacology. This knowledge base is imperative for capturing the most specific diagnoses. Oftentimes, I see coding programs that are simple bootcamps for CPC that do not require these additional courses or prior coding experience. These programs predominately focus on teaching the candidate to pass the test versus teaching the candidate to actually do the job. In addition, all coders need annual refresher training on the coding guidelines rather than relying solely on encoders to assist with coding. Rules such as ‘code all conditions that coexist at the time of admission, that develop subsequently, or that affect the treatment received and/or the length of stay’ are important. There’s a tendency for coders to only capture diagnoses that affect medical necessity or the DRG.

TAYLOR: I think all coder training should include HCC classifications, an overview of payment methodologies for various quality improvement initiatives, how to determine the top 10 HCCs in your practice or hospital, and how to monitor those diagnoses for compliance and to prevent revenue leakage. Pharmacology and pathophysiology are also important. Coders should know when and how to query for a definitive diagnosis in the presence of clinical signs and symptoms and/or the use of certain medications. Finally, training should include workflow implications of HCC capture (inpatient vs. outpatient settings). For example, in the outpatient setting, physicians typically select the code, and coders serve as auditors. The duration of patient encounters is only a few minutes in some cases, and there isn’t usually a formal process for queries. HCC capture in this setting requires a specific workflow that may not apply to the hospital setting.

MURPHY: Inpatient and outpatient coders both need training on HCC guidelines and classifications. I think they also need training on the inner-workings of risk-adjustment payment models, both big picture concepts and the nuances of those models. Managed Medicaid, for example, uses six different risk-adjustment models depending on the state. The depth of training into these models will vary depending on the direction in which the coder wants to take their career. An HCC auditor, for example, might need more training on a particular risk adjustment model.

“Training needs to focus more on why we code what we code – what’s the purpose? … The goal is to provide high-quality healthcare data.”

-Laurie M. Johnson

JOHNSON: Training needs to focus more on why we code what we code – what’s the purpose? I’m always surprised when coders tell me they report certain diagnoses simply because it’s what they’ve always done. This is a red flag. Coders should know why they collect this information because it will motivate them to go the extra mile. The goal is to provide high-quality healthcare data.

MODERATOR: Do you think all coders will eventually need HCC training?

“…it’s just a matter of time before risk adjustment sweeps across all payers. Physicians, CDI specialists, coding auditors, and managers will all need various levels of HCC training.”

-Bonnie S. Cassidy

DUNN: I believe all coders will need this training because risk adjustment is ICD-10-CM-based, and diagnosis code-driven reimbursement occurs in all care settings—inpatient, outpatient, and ambulatory care.

CASSIDY: Yes, I think it’s just a matter of time before risk adjustment sweeps across all payers. Physicians, CDI specialists, coding auditors, and managers will all need various levels of HCC training.

“By 2020, 75% of the population will be in some type of value-based plan.”

-Donna Malone

MALONE: I agree. Value-based care is not going away. It’s here to stay. As of 2019, far more Medicare Shared Savings Program ACOs are in or will be moved to contracts with two-sided risk. Previously, less than one percent were in a shared-risk arrangement, which meant that almost all of these ACOs didn’t need to repay money for poor performance. By 2020, 75% of the population will be in some type of value-based plan.

“I think the question is more about whether coders need training on how to follow the coding guidelines, and the answer is that they do.”

-John Murphy

MURPHY: I think the question is more about whether coders need training on how to follow the coding guidelines, and the answer is that they do. If coders follow the guidelines, it shouldn’t matter what payment methodology is in place. Risk adjustment training is great for those coders who want to make more money or move into other positions.

JOHNSON: It would be advantageous for everyone to have HCC training because we need accurate and comprehensive HCCs. Some physician coders only report four diagnoses on the 1500 claim form even though they can technically report up to 12. Hospital coders can report up to 25 codes on the UB-04 electronic claim. This deficiency affects the quality of physician data.

MODERATOR: What new healthcare career opportunities do you think will emerge for coders who understand risk adjustment?

DUNN: Risk adjustment emphasizes ICD-10-CM and is therefore an excellent opportunity for coders who don’t want to venture into surgical coding. I also believe that HCCs provide an opportunity for ambulatory CDI specialists—a role that is well-suited for coders. In the practice setting, CDI must be done concurrently or even before the patient arrives. 

“IT staff can run the numbers, but only coders can explain the meaning of the clinical data.”

-Bonnie S. Cassidy

CASSIDY: I think several roles will emerge or are already in existence. These include HCC coding auditors, directors of revenue integrity, ambulatory CDI specialists, and directors of revenue cycle transformation. The industry also needs individuals who understand documentation and coding who can work in analytics. IT staff can run the numbers, but only coders can explain the meaning of the clinical data.

MALONE: New career opportunities include physician educators as well as pre-visit and post-visit claim reviewers to ensure accurate HCC capture. In addition to the obvious code-based opportunities, CDI roles are also an area of opportunity for experienced coders with enhanced continual education. Another area of opportunity is with provider systems that have an Accountable Care Organization. Risk adjustment is a key component to accurately budgeting for this population.

“HCCs present a new auditing role for coders…”

-Earshler Taylor

TAYLOR: HCCs present a new auditing role for coders, and I think organizations may eventually create two types of auditing roles—one for HCCs and another for non-HCC coding. Another opportunity is working as a subject matter expert for technology vendors, building edits for software and updates or overseeing product development.

“…there are many opportunities for coders with knowledge of risk adjustment to move up career-wise in their organizations. ”

-John Murphy

MURPHY: I think there are many opportunities for coders with knowledge of risk adjustment to move up career-wise in their organizations. The risk adjustment market is vast, and there are few people who have knowledge of risk adjustment—even fewer with knowledge of coding for DRGs and risk adjustment. Physician educators who can analyze data and provide physician-specific training will be in demand. 

JOHNSON: One emerging role will be HCC clinical documentation improvement (CDI) specialist—someone who can help physicians capture all diagnoses that affect patient care—and report those conditions every year (when appropriate). This type of CDI work is already happening in large network-owned physician practices, and it will continue to expand into all practices as physicians become even more overwhelmed with the administrative side of healthcare. Whether the CDI specialist is embedded within each individual practice or at the corporate level overseeing multiple practices may vary from organization to organization.

MODERATOR: What advice can you provide to help coders work collaboratively with CDI specialists, physicians/other providers, auditors, and data analysts to ensure accurate and complete HCC capture?

“Create an environment where everyone can share their knowledge.”

-John Murphy

MURPHY: Create an environment where everyone can share their knowledge. For example, coders can educate others on how physician documentation translates to the coded data (and why it may not translate). It may be obvious to a clinician for instance that a patient has diabetes, but a coder may not be able to code that condition when the only documentation is an elevated hemoglobin.

DUNN: Collaboration can be difficult when coders work remotely. That’s why it’s important for remote coders to come onsite on a routine basis for face-to-face meetings. In addition, collaboration must go beyond internal staff to include health plans. Providers need to be able to connect the dots in terms of why they need to document a certain way.

“There needs to be an enterprise-wide understanding of the role of hospital-owned physician practices in achieving HCC compliance.

-Bonnie S. Cassidy

CASSIDY: Create a multi-disciplinary CDI program with physician queries in the physician offices. There needs to be an enterprise-wide understanding of the role of hospital-owned physician practices in achieving HCC compliance. Involve all of the key players from care delivery, finance, CDI, coding, patient access, and others to ensures the team’s understanding of a goal for accurate payments based on clinical complexity and denials prevention. The opportunity to capture HCCs and impact hospital payment often falls directly on office-based physicians.

Close the care gaps across the enterprise. Make quality patient care the number one priority, and everything else will fall in line.

MALONE: Think of yourself as a team. It’s about relationship-building. There’s nothing that puzzles me more than a provider who ignores queries. If the query isn’t clear, let the coders and CDI staff know. Ignoring the query doesn’t help anyone. Providers should be part of the education process to create more cohesion. The key component in all of this is TEAM! 

TAYLOR: Respect each other’s expertise. Don’t point fingers.

“It’s a revenue cycle team. One person can’t know everything about everything.”

-Laurie M. Johnson

JOHNSON: It’s a revenue cycle team. One person can’t know everything about everything. The more you collaborate, the more you learn. Standardize coding and documentation guidelines across all practices system-wide. Also provide HCC training for non-coders (e.g., medical assistants, billers, office managers, and front office staff) to explain how money will flow differently throughout the practice and the potential financial and data quality impact.

MODERATOR: How do you think healthcare organizations and other entities will use HCC data going forward?

“The CMS HCC model is perfectly suited to assess the complexity of care across the continuum, and it will integrate nicely with ICD-11.”

-Rose T. Dunn

DUNN: Risk adjustment could eventually become the only reimbursement system for the United States, completely replacing DRGs. We could also see a weighting system for the HCCs based on inpatient vs. outpatient services.

The best thing the United States could do is adopt the CMS HCC model because this model is not proprietary. Proprietary models layer another level of cost on providers as they try to understand how the models differ. The CMS HCC model is perfectly suited to assess the complexity of care across the continuum, and it will integrate nicely with ICD-11. With one model, we would have cleaner data and more accurate profiles across the United States.

“HCCs ultimately provide a snapshot into patient severity, giving payors valuable information they can use to assess outcomes, predict costs, and gauge overall hospital performance.”

-Bonnie S. Cassidy

CASSIDY: HCCs ultimately provide a snapshot into patient severity, giving payors valuable information they can use to assess outcomes, predict costs, and gauge overall hospital performance. Hospitals are vulnerable in this new world of HCC scrutiny, so they need to assess their own HCC data to build strong revenue integrity audit programs. 

MALONE: We’ll see more alignment between payers, organizations, and physicians. Also, the evaluation and management code changes that may take place will align with value-based care given the codes are heavily weighted toward the assessment and plan. CMS is encouraging physicians to document HCC conditions as they consider them when formulating a treatment plan. The data will also assist population health to better manage the population. This will allow for better chronic condition management with positive outcomes and improve quality of care and quality of life.

“HCC data and population health will become more intertwined.”

-Earshler Taylor

TAYLOR: HCC data and population health will become more intertwined. For example, we may see higher insurance premiums in certain geographic areas due to a higher disease burden.

MURPHY: ACOs will create more robust algorithms to stratify patient risk based on HCC data. I agree that there will be more of an effort to link social determinants of health with HCC data.

JOHNSON: We’ll see further refinements of risk adjustment payment methodologies just like we saw with DRGs and MS-DRGs. I also think we’ll see the coding system expand on the chronic condition side for additional specificity.

Fundamentals of HCC Coding
Learn more from Rose T. Dunn! Go beyond just the diagnoses — really understand the methodology behind HCCs with the course “Fundamentals of HCC Coding.” Learn more here.