HCC Coding for Risk Adjustment - MGMA

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HCC Coding for Risk Adjustment

Becky Cook, CPA, MHA

Sr. Consultant, Practical Data Solutions

Sr. Consultant, Reliance Consulting Group

Houston, Texas

Becky Cook does not have a financial conflict to report at this time.

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©2017 MGMA. All rights reserved. - 3 -

Learning Objectives

• Recognize how coding affects

reimbursements in risk-adjusted plans

• Identify how documentation affects RAF

scores

• Examine HCC coding concepts and the

impact on your practice

- 4 -©2017 MGMA. All rights reserved.

HCC Coding for Risk Adjustment

Today’s Agenda

• Define HCC risk scoring.

• Explore HCC risk scoring mechanics and the linkage to revenue cycle management, scheduling, contracting, electronic health records (EHRs) and risk management.

• Explain the relationship between physician documentation, coding, risk scoring, and reimbursement.

• Examine how payers use the data in contracting, rate negotiations, and incentive plans.

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Survey Question #1

What is your current knowledge of HCC Risk Scoring?

a. Heard of HCC, but not sure what it is.

b. Measures if a practice is at risk for losing money.

c. Forecasts the cost of care for patients with chronic conditions.


HCC Risk Scoring Forecasts Cost of Care for Patients with Chronic Conditions

Hierarchical Condition Category (HCC)

• Hierarchal Condition Categories are disease groups broadly organized

into body systems.

• The diagnoses within each disease group are clinically related in terms of

cost to the Medicare program.

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Risk Factor Scoring

• A methodology used to assess health risk/acuity using a numerical

relational scale.

• Each payor may develop a different methodology but we will be

discussing HCC.



Risk Adjustment Factor (RAF)

• A final scoring calculation assigned to a patient to assess risk, resulting in

a payment calculation.

• Includes chronic disease coefficient, age and gender demographics, dual

eligibility status and community status.

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HCC to Assess Patient Risk & Acuity

Characteristic of HCC ModelProspective in

Nature

Diagnostic Sources

HCCs / Multiple Chronic Diseases

Disease Interactions

Demographics


Simplified HCC and Risk Factor Fundamentals

18,000 DX codes

3,000 Assigned to HCC

87 HCCs

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HCC Mechanics of Scoring

ICD_10 Description HCC Risk Coefficient

E11.9 Type 2 diabetes mellitus without complications

19 0.104

E10.9 Type 1 diabetes mellitus without complications

19 0.104

Z79.4 Long-term (current) use of insulin 19 0.104

E11.65 Type 2 diabetes mellitus with hyperglycemia

18 0.318

E11.29 Type 2 diabetes mellitus w oth diabetic kidney complication

18 0.318


Why HCC Matters

Assumes CAP Amount of $600 per Month in a Medicare Advantage Sponsored Plan

HCC ICD_10 DescriptionRisk Adjusted

Payment

19 E11.9 Type 2 diabetes mellitus without complications

$62 X 12 = $749

19 E10.9 Type 1 diabetes mellitus without complications

$62 X 12 = $749

19 Z79.4 Long-term (current) use of insulin $62 X 12 = $749

18 E11.65 Type 2 diabetes mellitus with hyperglycemia

$191 X 12 = $2,292

18 E11.29 Type 2 diabetes mellitus w oth diabetic kidney complication

$191 X 12 = $2,292

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HCC Risk Factor Scoring for Smaller PCP Practices

If we don’t sponsor a HMO, Medicare Advantage, or CHIP plan –

why do we care about HCC or Risk Factors?

Value = Quality + Cost Savings


Why do we care about documenting and coding HCCs?

Because payors do – and they control payments.

Used with permission from MGMA www.mgma.com. ©2017.

http://www.mgma.com/

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©2017 MGMA. All rights reserved. - 15 -

MGMA Stat

Is Your Organization Coding for Risk Adjustments?

• One respondent noted, “Our practice is nearly 70% value

based including participation in a 100% risk sharing

commercial contract which necessitates that we tier and

risk stratify our populations. Attribution is our currency,

and risk is the multiplier for all per member per month

(PMPM) contracts.”

• One respondent from a specialty practice attempting to

navigate risk adjustment noted the group’s experience has

been frustrating: “We are documenting way more than we

need to about things that don’t pertain to us … hoping to

hit the mark.”

• Another poll respondent whose organization does not

code for risk adjustment said they were advised it was

suited mainly for primary care practices.


Value-Based Payments Have Arrived

• Most Payors have or will implement payments based on patient acuity

(Aetna, BCBS Plans, Cigna, Humana).

• Contract Fee Schedules may be correlated to level of patient acuity.

• May offer shared-savings or other incentive payments to reduce medical

costs while improving quality.

BUT…

• Shared Savings, ACO, MSSP and other types of Value-Based Contracts must

be suited to the practice.

• MACRA / MIPS may have the most to offer specialty only practices.

• Seek arrangements based on costs to manage procedures such as joint

replacements or cardiac procedures/care.

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Value-Based Contracts Measure Quality and Cost

$$ +

Work to Increase Quality

$$$$

“Top Performer”

$ Payor Reimbursement and/or Exclusion

from Plans

$$ +

Work toDecrease Costs

Lower

Cost

Higher Quality


Survey Question #2

Which Statement is True?

a. HCCs are assigned to acute episodes of care.

b. Networks may use cost and risk data to include or exclude physicians

from participation.

c. Physician claim data is not used for HCC scoring.

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Survey Question #2


c. Physician claim data is not used for HCC scoring

• Physician office claims are the primary source for diagnosis codes.

• Some facility and diagnostic coding is specifically excluded such as SNFs,

Hospice, Home Health, Laboratories, Imaging Centers

• Hospital Inpatient and Outpatient coding is included but these are based on

physician notes

• A study by 3M estimates 80% of patient encounters occur in physician

offices so integrated systems need to work through their associated

physician practices


Survey Question #2


a. HCCs are assigned to acute episodes of care

• HCCs are assigned ONLY to select chronic conditions.

• Some chronic conditions, such as hypertension or prediabetes, do not have

HCC scores. Not because they are not serious or not chronic but because

the cost of providing care is not significantly expensive.

• Keep the EHR Problem List up to date with Chronic Conditions that need to

be documented ANNUALLY. Make it easy for physicians to find the pertinent

conditions, assess the patient, and document their status.

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Survey Question #2


b. Networks may use cost and risk data to include or exclude physicians

from participation.

• Insurers with narrow networks may exclude physicians who are not

compliant with quality metrics or who have significantly higher costs than

peers.

• Payors use “Cohorts” of similar populations for benchmarking.

• ACOs may also disinvite participants if an individual practice is negatively

impacting incentive awards.


How Do Payors Measure Quality and Cost?

$$ +

Work toIncrease Quality

12,000 PatientsRAF 1.13

Cost/Pt $9,000“Top Performers”

5,000 PatientsRAF 0.92

Cost/Pt $13,000“High Cost Practice”

$$ +

Work toDecrease Costs

Lower

Cost

Higher Quality

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How to Create More Value – Physician Clinical Notes are Key

Top 10 Most Under-Documented HCCs

1. Amputations

2. Artificial Openings

3. Asthma and pulmonary disease

4. Chronic skin ulcer

5. Congestive heart failure

6. Drug Dependence

7. Metastatic cancers

8. Morbid obesity

9. Rheumatoid arthritis

10. Specific type of major depressive disorder

Top 10 Most Over-Documented HCCs

1. Conditions that have been surgically corrected (e.g. abdominal aortic aneurism)

2. Diabetes with complications

3. Malnutrition

4. Nephritis

5. Old fractures reported as current

6. Unspecified pneumonia reported as pneumococcal

7. Polyneuropathy reported as current when no treatment evaluation or monitoring is documented

8. Reporting cancer as current rather than as historical

9. Reporting acute stroke instead of late effects of stroke

10. Vascular disease reported as current when no treatment, evaluation or monitoring is documented

Source: 3M aggregated claims data; HFM

October 2017, The Role of HCCs in a Value-

Based Payment System


How Do Payors Measure Quality and Cost?

Quality Metrics

• Using CPT and DX Codes.

• Obtaining lab results from national lab.

• Calculating admissions, readmissions, radiology exams, and many more ratios. to compare to actuarial “benchmarks”.

• Pharmacy refill rates for chronic meds.

Cost of Care

•Medical Loss (Claims Paid)RAF (Patient Acuity Score)

• If Claims Paid are the same for 2 populations, using a Risk Score calculates an effective cost for each group of patients

• A Lower Acuity Score results in a higher cost for patient care.

• $10,000 ÷ 0.92 = $10,970 Risk Adj Cost

• A Higher Acuity Score means sicker patients are being cared for with lower costs.

• $10,000 ÷ 1.08 = $9,260 Risk Adj Cost

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Line

Number

Gainshare Calculation ExampleScenario 1

(5% Below

Target)

Scenario 2

(5% Above

Target)

Scenario 3

(0.5% Below

Target)

Scenario 4

(25% Below

Target)

Scenario 5

(25% Above

Target)

2 Market Baseline Claims PMPM $ 300.00 $ 300.00 $ 300.00 $ 300.00 $ 300.00

3 Market Financial Performance Period Claims PMPM $ 330.00 $ 330.00 $ 330.00 $ 330.00 $ 330.00

4 Market Trend (line 3 divided by line 2) 110.0% 110.0% 110.0% 110.0% 110.0%

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6 Group Baseline Weighted Risk Score 1.25 1.25 1.25 1.25 1.25

7 Group Measurement Weighted Risk Score 1.24 1.24 1.24 1.24 1.24

8 Group Risk Score Change (line 7 divided by line 6) 99.2% 99.2% 99.2% 99.2% 99.2%

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10 Market Baseline Weighted Risk Score 1.5 1.5 1.5 1.5 1.5

11 Market Measurement Weighted Risk Score 1.51 1.51 1.51 1.51 1.51

12 Market Risk Score Change (line 11 divided by line 10) 100.7% 100.7% 100.7% 100.7% 100.7%

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14 Risk Score Adjustor (line 8 divided by line 12) 98.5% 98.5% 98.5% 98.5% 98.5%

15 Normalized Market Trend (line 14 times line 4) 108.4% 108.4% 108.4% 108.4% 108.4%

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17 Group Baseline Claims PMPM $ 275.00 $ 275.00 $ 275.00 $ 275.00 $ 275.00

18 Normalized Market Trend (from line 15) 108.4% 108.4% 108.4% 108.4% 108.4%

19 Claims PMPM Target (line 17 times line 18) $298.09 $298.09 $298.09 $298.09 $298.09

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21 Group Final Allowed Claims PMPM $283.19 $313.00 $296.60 $223.57 $372.62

22 Group Final Paid Claims PMPM $226.55 $250.40 $237.28 $178.86 $298.09

23 Paid to Allowed Ratio (line 22 divided by line 21) 80.0% 80.0% 80.0% 80.0% 80.0%

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25 Total Group Member Months (10,000 average members is shown as an example) 120,000 120,000 120,000 120,000 120,000

26 Minimum Savings Percentage (from Exhibit G - Table 4) 2.60% 2.60% 2.60% 2.60% 2.60%

27 Minimum Loss Percentage (from Exhibit G - Table 5) N/A N/A N/A N/A N/A

28 Maximum Savings Percentage (from Exhibit G - Table 6) 15.00% 15.00% 15.00% 15.00% 15.00%

29 Maximum Loss Percentage (from Exhibit G - Table 7) N/A N/A N/A N/A N/A

30 Minimum Savings PMPM (line 19 times [1 minus line 26]) $ 290.34 $ 290.34 $ 290.34 $ 290.34 $ 290.34

31 Minimum Loss PMPM (line 19 times [1 plus line 27]) N/A N/A N/A N/A N/A

32 Maximum Savings PMPM (line 19 times [1 minus line 28]) $ 253.38 $ 253.38 $ 253.38 $ 253.38 $ 253.38

33 Maximum Loss PMPM (line 19 times [1 plus line 29]) N/A N/A N/A N/A N/A

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36 Accountable Care Payment PMPM (from Exhibit G - Table 9) $1.50 $1.50 $1.50 $1.50 $1.50

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Quality Adjustment Percentage (from calculation as outlined in Exhibit A, 95% just illustrative in this

example) 95% 95% 95% 95% 95%

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40 Incentive Share Percentage (from Exhibit G - Table 8) 50% 50% 50% 50% 50%

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42 Calculation of Group Incentive Payment

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44 Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5

45 Claims PMPM Target (line 19) $298.09 $298.09 $298.09 $298.09 $298.09

46 Group Final Allowed Claims PMPM (line 21) $283.19 $313.00 $296.60 $223.57 $372.62

47 Incentive Share Amount (line 45 minus line 46) $14.90 ($14.90) $1.49 $74.52 ($74.52)

48 Minimum Savings PMPM (line 30) 290.34$ 290.34$ 290.34$ 290.34$ 290.34$

49 Minimum Loss PMPM (line 31) N/A N/A N/A N/A N/A

50 Maximum Savings PMPM (line 32) 253.38$ 253.38$ 253.38$ 253.38$ 253.38$

51 Maximum Loss PMPM (line 33) N/A N/A N/A N/A N/A

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53 Is Group Final Allowed Claims PMPM greater than Claims PMPM Target? if yes, Adjusted Incentive Share Amount = Zero

54 if no, then continue

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56 Is Group Final Allowed Claims PMPM greater than Minimum Savings PMPM? if yes, Adjusted Incentive Share Amount = Zero

57 if no, then continue

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59 Is Group Final Allowed Claims PMPM less than Maximum Savings PMPM?

60 If no, then continue

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Is Group Final Allowed Claims PMPM less than Minimum Savings PMPM but greater than the Maximum

Savings PMPM?

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65 Adjusted Incentive Share Amount 14.90$ $0.00 $0.00 44.71$ $0.00

66 Paid to Allowed Ratio (line 23) 80.0% 80.0% 80.0% 80.0% 80.0%

67 Paid Adjusted Incentive Share Amount (line 65 times line 66) 11.92$ $0.00 $0.00 35.77$ $0.00

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69 Group Incentive Percentage (line 40) 50% 50% 50% 50% 50%

70 Quality Adjustment Percentage (line 38) 95.0% 95.0% 95.0% 95.0% 95.0%

71 Is Paid Adjusted Incentive Share Amount (line 67) zero?

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Quality Adjusted Group Incentive Percentage (only applied when Paid Adjusted Incentive Share Amount

is greater than zero, when Paid Adjusted Incentive Share Amount is equal to zero Group Incentive Share

Percentage (Line 69) applies) 47.5% 50.0% 50.0% 47.5% 50.0%

74 Group Earned Incentive (line 67 times line 73 times line 25) 679,651$ $0.00 $0.00 2,038,954$ $0.00

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77 Total "Accountable Care Payments" (line 25 times line 36) 180,000$ 180,000$ 180,000$ 180,000$ 180,000$

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79 Is Group Earned Incentive equal to zero?

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81 Is Group Earned Incentive greater than zero?

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Group Incentive Payment (Gainshare model requires Group reimburse Company Total "Accountable

Care Payments" when Group Earned Incentive equals zero) 499,651$ (180,000)$ (180,000)$ 1,858,954$ (180,000)$

if yes, Adjusted Incentive Share Amount = Incentive Share Amount

if yes, Adjusted Incentive Share Amount =

Claims PMPM Target minus the Maximum Savings PMPM

if yes, Group Incentive Payment =

Group Earned Incentive minus Total "Accountable Care Payments"

if yes, Quality Adjusted PCMH Incentive Percentage =

Group Incentive Percentage

if no, then Quality Adjusted PCMH Incentive Percentage =

Group Incentive Percentage multiplied by Quality Adjustment Percentage

if yes, Group Incentive Payment = zero minus the Total "Accountable Care Payments"

if no, then continue


Contract Example – Risk Scoring


How can our practice obtain, compute, or monitor RAF / HCC scores?

• Payors will provide data files

• Typically will only contain

descriptive terms not scores

• May not be clear what claims

period is covered

• May have 30 to 90 days lag

• Electronic Medical Records

• Links a HCC to DX but does not

construct a “score”

• No data lag

• May not adequately describe all

conditions if patient utilizes

multiple physicians

• Analytics / Data Warehouse

• May be built using Payor or Practice

data or both

• Calculate scores to provide ability to

calculate expected payments or risk-

adjusted costs

• Capacity to perform historical and

projected financial calculations

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Use HCC to Improve Contract Results

Engage Senior Leadership

• Involve administrative and physician

leadership

• Train Physician Champions

• Require learning opportunities for all

staff

• Engage care coordinators and nursing

staff to help with identifying chronic

conditions and updating problem lists

Improve documentation & coding

• Perform annual patient assessments

• Document chronic conditions in

problem list of EMR

• Consider training coders on HCC coding

• Link complications to primary chronic

condition

• Distinguish between current and

historical status of conditions

• Assess all pertinent conditions


Survey Question #3


a. Fee For Service reimbursement is used for claims payment, with incentives offered for high quality and risk management.

b. Successful financial management requires an understanding of documentation, CPT/ICD coding, and HCC risk scoring mechanics.

c. Financial leadership will involve collaboration with clinical teams.

d. All of the above.

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Survey Question #3

Which statements are true?

✓ Fee For Service reimbursement is used for claims payment, with incentives

offered for high quality and risk management.

• Claims management is not dying – still the primary payment mechanism

for value-based plans.

• Most shared-savings or incentives are paid 5-8 months after the plan

year.

• Managing patient co-pays and deductibles is essential.


Survey Question #3


✓ Successful financial management requires an understanding of

documentation, CPT/ICD coding, and HCC risk scoring mechanics.

• Revenue Cycle management is still a key skill for financial managers.

• Add skills for HCC Coding – at least enough to understand how contracts

are impacted.

• HCC is managed by educating physicians and coders, then monitoring

data.

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Survey Question #3


✓ Financial leadership will involve collaboration with clinical teams.

• Will need skills of care coordinators, nursing teams, schedulers, coders

all working together to maximize contracts.

• HCC may be used to stratify or group patients to expedite access, assign

care coordinators, or prioritize contract metrics.

• May be combined with other care indicators such as LACE score or

pharmaceutical refill scores to predict hospitalizations.


Survey Question #3


a. Fee For Service reimbursement is used for claims payment, with incentives

offered for high quality and risk management.

b. Successful financial management requires an understanding of

documentation, CPT/ICD coding, and HCC risk scoring mechanics.

c. Financial leadership will involve collaboration with clinical teams.

d. All of the above.

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Continuing Education ACMPE credit for medical practice executives…………... 1ACHE credit for medical practice executives…………..…. 1CME AMA PRA Category 1 Credits™……………………….. 1

*CPE credit for certified public accountants (CPAs)……….. 1.2CEU credit for generic continuing education………..……. 1

*CPE CODE: 5 0 3 E

Let the speakers know what you thought!Evaluations will be emailed to you daily.

Thank You.

MGMA.ORG

Becky Cook

[email protected]

414.550.7896

Houston, Texas

HCC Coding for Risk Adjustment - MGMA

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