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HCC Coding Needs Rise as Medicare Advantage Gains Increased Popularity

Posted by David Fong on Jul 21, 2017 7:00:00 AM

Medicare Advantage (MA) is a complex program that continues to gain popularity, with about one-third of Medicare beneficiaries currently enrolled in a variety of MA programs. MA plans are issued by MAOs, or Medicare Advantage Organizations, that are typically insurance companies.


Medicare beneficiaries are attracted to these programs because they offer increased coverage for little increase in cost, relative to traditional Medicare. The MAOs like these programs because their payment from Medicare is risk-adjusted. This means that the MAOs receive extra payment for sicker patients. This is the point where the system becomes challenging because high risk scores can be developed by using additional diagnoses that may or may not be reflected in the documentation.


It is all too easy to include, either purposefully or inadvertently, additional diagnosis codes that increase the risk adjustment factor. The actual reimbursement calculation of the risk adjustment factor is through a separate system called the hierarchical condition categories (HCCs).


HCCs are based on a patient’s estimated health – paying for the predicted patient costs by adjusting those payments based on demographics, patient health status, and diagnosis information from medical records.  It’s not a new concept. Medicaid mandated this model in 1997 and began using it in 2004. But as Medicare Advantage has gained popularity, HCC coding needs has similarly risen.


Routine auditing is the mechanism generally used to make certain that the risk adjustment factor and the supporting documentation are appropriate. This auditing includes Risk Adjustment Data Valuation (RADV) audits.


HHS estimates that the root causes of FY 2015 Medicare Part C improper payments resulted from errors due to Insufficient Documentation to Determine (72.7 percent) and Administrative or Process Errors Made by Other Party (the Medicare Advantage (MA) organizations) (27.3 percent).


To ensure your organization does not get caught in the web of this complex program, you need to consider the services of a professional coding company such as Aviacode. Our HCC coders and auditors are experienced, credentialed and knowledgeable in the latest CMS coding guidelines and Risk Adjustment Data Validation (RADV) audits. They can provide fast actionable results that code and ensure your coding is in compliance with all CMS regulations.


Topics: Revenue Cycle Management, Medical Coding, HCC Coding