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Measuring the effect of HCCs, part 3

Editor’s note: This article originally appeared in the Revenue Cycle Advisor. For more information about Hierarchical Condition Categories (HCCs), read this article from the CDI Journal by Gloryanne Bryant, RHIA, RHIT, CCS, CCDS. To read the first part of this article, click here. To read the second part of the article, click here. The views expressed do not necessarily represent those of ACDIS or its advisory board.

The effect of hierarchical condition categories (HCCs) may double as hospitals buy physician practices and form health systems made up of a spectrum of different types of providers. Physician reimbursement has become increasingly complex and some physicians find it easier to operate with the support of a larger organization. Organizations that were once solely hospital-based now have to grapple with the complexities of a different set of billing and reimbursement regulations, says James P. Fee, MD, CCS, CCDS, vice president of Enjoin, Collierville, Tennessee and a hospitalist at Our Lady of the Lake Regional Medical Center in Baton Rouge, Louisiana.

Fee’s seen a lot of interest in HCCs from large multi-practice groups affiliated with a larger organization and some smaller physician practices have also started to pay attention to HCCs, particularly if they work with a larger organization for EHR assistance to support meaningful use. “I think we’re at a tip of an iceberg in terms of interest in HCCs. I think providers have a lot more to learn about HCCs,” he says.

As provider organizations grow, they should create a program to collect and merge patient data for analysis just as payers do. This will give the provider insight into what reimbursement they can expect for certain patient populations and it can help pinpoint what departments need more help.

Organizations must ensure that coders, CDI specialists, and clinicians have the tools and knowledge to successfully navigate the documentation complexities of HCC-based models.

One common pitfalls found in physician practices stems from failure to document chronic conditions, Fee says. Clinicians generally learned that, to maximize the medical necessity of a service, they should document four diagnoses. But in HCC models, clinicians must document beyond the patient’s immediate diagnosis to address any condition which could affect the amount of care and attention the patient may need.

For HCCs, all chronic conditions, including past surgeries, must be documented at least once, annually, during a face-to-face encounter. For example, if a patient has an amputation and the physician documents it the year it happens, but does not document it during subsequent visits, HCC data will not reflect the amputation—jokingly referred to as HCC’s phantom limb

Because HCC data is calculated once a year based on information reported on claims, if the amputation isn’t listed in a given year, the data and risk adjustments for that patient will be created as if the patient never had an amputation, leading to a negative payment impact.

Remember that HCCs are grouped into related “families,” Fee says. Disease groupings with progressively higher severities establish a hierarchy that gives the highest severity the highest weight. HCC12 (breast, prostate, and other cancers and tumors) progresses to HCC11 (colorectal, bladder, and other cancers), HCC10 (lymphoma and other cancers), HCC09 (lung and other severe cancers), to HCC08 (metastatic cancer and acute leukemia). The coefficiencies for these HCCs range from 0.146 (HCC12) to 2.625 (HCC08).

CMS pays for the most severe form of disease reported in a given year. For example, in February 2016 a patient is diagnosed with prostate cancer (HCC12 = 0.146). In July 2016, the patient is diagnosed with metastatic prostate cancer to vertebra (HCC08 = 2.625). HCC08 is higher in the hierarchy than HCC12. All disease groups lower in the hierarchy than HCC08 are dropped. More resources are allocated to sicker patients; therefore, it’s vital that documentation and coding accurately express the patient’s condition.

Looking at the data can be an eye-opening experience, especially for physicians, Fee says. The data will make the connection between accurate documentation that includes chronic conditions and supports a patient’s actual level of severity and risk score, and poor documentation that makes a sick patient appear relatively healthy. The medical record should document the patient’s actual condition, the services that are medically necessary for the patient, and should reflect the hard work clinical staff put into caring for him or her.


Note from the Instructor: Take a road trip this summer

road trip

Take a CDI road trip this summer!

by Laurie L. Prescott, RN, MSN, CCDS, CDIP

I recently taught a CDI Boot Camp at a large, multi-site organization, with attendees coming from CDI, HIM, and quality departments from four different sites. We began the week discussing the Official Guidelines for Coding and Reporting, moving through each Major Diagnostic Category (MDC), and talking about concerns related to code assignment and sequencing.

This discussion was very much a review for the attendees who hailed from the CDI and coding departments. The quality staff, however, coming from a variety of roles related to core measures, patient safety indicators, inpatient quality reporting, and hospital value-based purchasing, had continuous lightbulb moments.

One individual literally hit the side of her head and said, “This explains so much. How come we were not taught this before?”

After the first few days, I asked the quality department staff if they have ever told a coder or a CDI specialist that they “coded it wrong.” Almost every attendee raised their hand. I then asked the CDI specialists and the coders if they have ever been told they had coded a record incorrectly by an individual who had no understanding of coding guidelines. Every one of them raised their hands.

We discussed communications with providers, compliant queries, and practices of leading versus non-leading interactions when speaking to providers. Many of those who worked under the umbrella of quality spoke up to say that perhaps their discussions with providers had been leading. They never received education about how to compliantly query a provider for a diagnosis or how to query for removal of a diagnosis.

When we discussed sequencing new rules related to Chronic Obstructive Pulmonary Disease (COPD) and pneumonia, I noticed the quality folks looking at each other and making faces. I stopped the class to ask what was wrong. They responded by asking when the change occurred. When I told them late last year—per guidance from AHA Coding Clinic, Third Quarter 2016—they all sighed and one expressed frustration about not knowing about the change earlier. They had been struggling to understand why admissions for COPD suddenly sky rocketed. One simple discussion answered a question they had been struggling with for months. And, as an added bonus, they learned why the coders were sequencing these diagnoses as they were.

As the week progressed, we talked about the specifics of a number of quality monitors—discussing what populations were included, exclusions, and the adjustments applied to organizations related to reimbursement. Now the coders and the CDI staff were asking why they hadn’t been taught this material before. They began to understand why the quality department was so concerned about the presence or absence of specific diagnoses. The quality staff were saying, “we need your help.” There was a purpose to this class: to knock down silos, learn from each other, and support each other.

I often describe our efforts as a group of individuals driving down a five lane highway. We have coders, CDI specialists, quality staff, case managers/utilization review staff, and denials management all traveling in their own lane. But, we are all heading to the same destination. We are all working to bring success to our organization. We wish to be recognized for the high caliber of care we provide, and consequently reimbursed appropriately for the resources we lend to that effort. Documentation is the key to this successful road trip. The providers are working to navigate safely on this busy highway with only the drivers to direct them.

As we travel down this road, we often swerve into each other’s lane. Often we are forced to swerve because the provider looks for guidance from us, assuming we understand the driver’s manual for the other cars on the road. If we do not understand every other driver’s role and their specific manual, we cannot support each other. We need to keep all our vehicles traveling in the same direction at a safe speed and ensure that as the providers try to cross the road we don’t run them down. It is confusing to providers if the CDI specialists instructs them one way and the denial management team tells them the complete opposite. Then they seek clarification from the quality coordinator and get a third interpretation of the “rules.” The providers are bound to give up and just navigate in the bike lane, never making any actual progress.

So, how do we learn to support each other? We need to step out of our comfort zones and spend some time with the other disciplines driving down that highway. We need to ask questions and answer other’s questions in return. We need to recognize that what we do affects the other’s work and work to support them. Large organizations often foster silos more than smaller organizations as they separate out the job functions more definitively. Often smaller organizations expect one person to wear a number of hats. Even though there are issues with overwhelming one individual, it also breaks down barriers.

Before you panic, I am not suggesting one person does it all. I am suggesting, though, that we intermingle a bit more, shadow different job roles, invite others to shadow us.

Take the road trip together—it’s more fun that way!

Editor’s Note: Laurie L. Prescott, RN, MSN, CCDS, CDIP, is a CDI Education Specialist at HCPro in Danvers, Massachusetts. Contact her at For information regarding CDI Boot Camps visit

Book Excerpt: CDI’s role in inpatient-only procedure documentation


Debbie Mackaman, RHIA, CPCO, CCDS

By Debbie Mackaman, RHIA, CPCO, CCDS

Connect CDI, utilization review, and case management before the patient is discharged

When a procedure converts to an inpatient-only procedure during the surgery, the documentation process may get a little more complex. Analyze what happened during the procedure itself. If the inpatient-only procedure is performed on an emergency basis, it’s likely the admission order was not obtained prior to the procedure. The outcome for the patient will determine the next steps. If the patient expires, no further action is required by the registration or operating room staff. The coding and billing teams take over resolution of the case.

If the patient does not expire, the surgeon should confirm the type of surgery originally scheduled and the reason for the needed change to the inpatient-only procedure. He or she should do so before the patient leaves the postoperative area. The care team needs to make a determination regarding the admission of that patient. Under current CMS guidance, the three-day payment window may apply in this scenario. The case should be held for billing purposes until a thorough post-discharge review can be completed.

CDI staff may be involved in the initial review of the case. If CDI staff suspect an inpatient-only procedure was performed without an admission order, they should work with the coding team to identify the correct procedure code and verify if the procedure in question meets inpatient-only criteria. If it does, obtaining an inpatient admission order should be a priority. At this point, if necessary, the utilization review (UR)/case management (CM) team can step in.

The involvement of the UR/CM team is also critical when an inpatient-only procedure is canceled after the patient is admitted. Although the patient was admitted with the intention of performing the procedure and, therefore, the admission should be covered, each case should be independently reviewed. If the patient does not need acute medical care, his or her status may be changed from inpatient to outpatient, when appropriate, using Condition Code 44. When all conditions are met, Condition Code 44 allows a hospital to change the status and bill the services on an outpatient claim; however, timing is everything.

Editor’s note: This article is an excerpt from the “Inpatient-Only Procedures Training Handbook” by Debbie Mackaman, RHIA, CPCO, CCDS, an instructor for HCPro’s Medicare Boot Camps. To read the Fiscal Year 2017 inpatient-only list, visit the OPPS page on the CMS website and download Addenda E.

Q&A: Best practices in time documentation


Got CDI questions? Ask ACDIS!

Q: What is the best way to document time spent by physicians performing procedures? The CPT® codes state a vague time amount but the doctors struggle with this.

A: Time is always one of those really fun things, especially with E/M codes, because CPT puts a vague description of time amount requirements out there. So often, I end up having to query the physicians for time spend performing a procedure. I always like to have them explain the time. For example, he or she could say, “I spent 20 minutes of our 30-minute visit explaining how to properly use a new asthma inhaler.” That explains, how the physician met with the patient for 30 minutes and out of that time, used 20 minutes to explain how to use the new inhaler rather than just saying, “I spent 20 minutes discussing counseling or coordination of care.”

The other area that I always like to mention is sometimes time is best documented as “time in, time out.” Physicians are going to add that time up all day, especially if it’s a critical care patient. Physicians may want to get in the habit of documenting, “I walked in the patient’s room at 9:05 a.m. and we did our full thorough E/M exam and medical decision-making. I walked out of the patient’s room at 9:45 a.m.” So now coders have 40 minutes that a physician spent with the patient. And then a physician may go back into the room three hours later and document, “Patient was not responding well to those previous interventions. I now am back in the room at 11:18 a.m. and I spent from 11:18 a.m. until 1 p.m. with the patient and we’re still working on these interventions.” Then coders can add up all those time increments.

So to me, the best way I’ve found for providers to calculate E/M time is to document how many minutes of the total visit time that he or she spent counseling, doing coordination care, or what the provider talked to the patient about. But when I’m auditing inpatient records, I like to see the time in and time out and a bulk amount of time at the end of the day that I can add up to bill for that full-time increment and to know it’s all accounted for.

Editor’s Note: Lori-Lynne A. Webb, CPC, CCS-P, CCP, CHDA, CDIP, COBGC, AHIMA-approved ICD-10-CM/PCS trainer, answered this question during the HCPro webinar “Coding and Reporting Medical Necessity: Essentials for Coders and Other Healthcare Professionals.” This Q&A originally appeared in JustCoding

Book Excerpt: CCDS exam format


Fran Jurcak, MSN, RN, CCDS

By Fran Jurcak, MSN, RN, CCDS

The CDI specialist role is complex and multidisciplinary, suitable for clinically knowledgeable professionals who are proficient in analyzing and interpreting medical record documentation and capable of tracking and trending their CDI program goals and objectives. These professionals possess knowledge of healthcare and coding regulations, anatomy, physiology, pharmacology, and pathophysiology. Furthermore, such professionals possess the valuable ability to engage physicians in dialogue and educational efforts regarding how appropriate clinical documentation benefits patient outcomes and the overall well-being of the healthcare system.

Therefore, the CCDS exam content stems from:

  • Analysis of the activities of clinical documentation specialists in a wide range of settings, hospital sizes, and circumstances
  • Input from ACDIS member surveys
  • Input and research of the CCDS advisory board comprised of experienced clinical documentation specialists

The examination is an objective, multiple-choice test consisting of 140 questions, 120 of which AMP uses to compute the final score. The exam questions have been designed to test the candidate’s multi-disciplinary knowledge of clinical, coding, and healthcare regulations, as well as the roles and responsibilities of a clinical documentation specialist. Choices of answers to the examination questions will be identified as A, B, C, or D and consist of the following question types:

  • Recall questions test the candidate’s knowledge of specific facts and concepts relevant to the day-to-day work of CDI professionals. The examination is an open-book test; candidates may use reference resources in answering recall questions, as this is the manner in which accreditation professionals frequently carry out their responsibilities.
  • Application questions require the candidate to interpret or apply information, guidelines, or rules to a particular situation.
  • Analysis questions test the candidate’s ability to evaluate and integrate a range of information in problem solving to address a particular challenge.

According to the CCDS Candidate Handbook, approximately 40% of the questions can be classified as the recall type, 40% as application type, and 20% as analysis type.

Editor’s note: This article is an excerpt from the “CCDS Exam Study Guide,” by Fran Jurcak, MSN, RN, CCDS. To read more about certification, visit the ACDIS website, here.

Measuring the effect of HCCs, part 2

Editor’s note: This article originally appeared in the Revenue Cycle Advisor. For more information about Hierarchical Condition Categories (HCCs), read this article from the CDI Journal by Gloryanne Bryant, RHIA, RHIT, CCS, CCDS. To read the third part of this article, come back to the blog next week. The views expressed do not necessarily represent those of ACDIS or its advisory board.

Separate rumors from facts in relation to risk-adjustment

Organizations may mistakenly believe that hierarchical condition categories (HCCs) are currently being applied to all reimbursement models and CDI program staff may not understand the nuances of how risk adjustments get calculated for certain claims-based outcomes such as mortality or readmissions, says James P. Fee, MD, CCS, CCDS, vice president of Enjoin, Collierville, Tennessee.

Organizations need to begin understanding HCCs and what their risk-adjustment factor (RAF) is, but these codes do not currently affect all reimbursement models across the board. For example, HCCs primarily affect the cost category of MIPS. The relative category weighting for cost is 0% for 2017 but will be 30% for 2019 and will not begin to affect payment until 2020. Evaluate what metrics and reimbursement are affected by HCCs and target resources.

“All of these risk-adjustment methodologies and HCCs in particular are being used in compensation in ACOs and in the value-based purchasing models that we’re looking at for future reimbursement,” says Monica Pappas, RHIA, president of MPA Consulting, Inc., in Long Beach, California. “So we really have to learn more about the system and be more informed about the impact of some of these codes that we typically don’t pay attention to.”

Organizations already specify if codes are complications or comorbidities or major complications or comorbidities and make calculations based on Medicare Severity-Diagnosis Related Groups. The same general principles can be applied to HCCs, Pappas says. Although the sheer number of codes can seem overwhelming, hospitals can work with vendors to create systems to track and flag the codes, and many HCCs fall in the same category, she says.

Coders and CDI professionals can use that as a shortcut to help them remember common targets. As demand rises, vendors will likely develop more sophisticated tools to assist in identifying these codes, flagging documentation for physicians and CDI specialists, and analyzing data.

“I don’t think any human being is capable of knowing all this,” she says. “The amount of information is massive and if we don’t look to some technology solutions, we’ll never win.”


Note from Associate Editorial Director: Growing a CDI garden

CDI garden

Grow your CDI garden this summer

By Melissa Varnavas

Longstanding ACDIS members know I’m not one to shy away from a good extended metaphor. Today, is June 1. Spring has given up her blooms. The petals have fallen away from the tulips and the daffodil heads have dropped or been plucked by those dedicated gardeners among us.

While we haven’t quite reached true summer yet, the gardens are evolving. In my yard, bridal wreath spirea creates a wall of white blooms. My niece likes to shake the branches over us creating a fluttering of petals that catch in our hair as we run through.

The point of the metaphor is this—just like our gardens, clinical documentation improvement efforts continue to evolve as do the individuals who claim such efforts as their professional calling.

To be sure, when ACDIS began 10 years ago, each CDI professional and each program, too, perhaps, saw itself uniquely. A crocus. A primrose. A hyacinth. A lily of the valley. Over that time, however, CDI efforts meshed. Over that time, the roots of those perennials spread. The bulbs multiplied. And now we have a garden that is dense with experience and flourishing in its ability to help improve clinical documentation not just in the spring, not just for financial outcomes, not just to help coders and physicians speak the same language, but as the seasons turn to assist patients and the hospitals and physicians which serve them in a wide variety of ways. You know these flowers well as they begin to bloom—quality, medical necessity, outcomes measures, patient safety indicators…

As the ACDIS Advisory Board wrote in a Position Paper, “Developing effective CDI leadership: A matter of effort and attitude,” released last week, it’s up to each and every individual working in the field—be that person a manager of a multi-disciplinary team of five or 50, be that person the sole CDI professional in a rural facility, be that person brand new to the role—to take ownership of their career and their program and become an effective leader, become the gardener of their profession.

You’ll need to water, especially in the height of summer. You’ll need to invest in your own education. You’ll need to reach out and network with others in the field. You’ll need to weed and fertilize and stake and tie and organize. You’ll need to take in information and seek out the primary sources to verify the information you’ve learned.

And when you step back and see the colors and the fruits of your labor you’ll know the role you play in brining such cohesiveness forth and role that each flower also plays.

Editor’s Note: Varnavas is the Associate Editorial Director for ACDIS, overseeing its various publications and website content. Contact her at

Guest Post: Improving the selection of a principal diagnosis


Adrienne Commeree, CPC, CPMA, CCS, CEMC, CPIP

by Adrienne Commeree, CPC, CPMA, CCS, CEMC, CPIP

The selection of the principal diagnosis is one of the most important steps when coding an inpatient record. The diagnosis reflects the reason the patient sought medical care, and the principal diagnosis can drive reimbursement.

But while code selection may seem fairly straightforward in some cases, it can seem like throwing a dart at a board in others. Multiple factors must be considered and reviewed before a coder can assign a diagnosis as principal. There may be many reasons a patient went to the hospital, and multiple conditions may have been treated during that patient’s stay. Because of these complicating factors, relying solely on a software program to discern the principal diagnosis might lead to errors. A thorough review of the documentation, along with a solid understanding of the Official Guidelines for Coding and Reporting, instructional notes, and Coding Clinic issues, is imperative.

The ICD-10-CM Official Guidelines for Coding and Reporting state:

The circumstances of inpatient admission always govern the selection of principal diagnosis. The principal diagnosis is defined in the Uniform Hospital Discharge Data Set (UHDDS) as “that condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.”

The UHDDS collects data on patients related to race and ethnicity and is issued by the Centers for Disease Control and Prevention. Its definitions are used by acute care hospitals to report inpatient data elements that factor in the DRG classification system, which is how the hospital receives reimbursement for the inpatient admission.

Coders and CDI professionals must review all the documentation by the physician or any qualified healthcare practitioner who, per the coding guidelines, is legally accountable for establishing the patient’s diagnosis.

Parts of the medical record include the history and physical, progress notes, orders, consultation notes, operative reports, and discharge summary. While reading through a provider’s documentation, coders must ask themselves: “Is this condition requiring any diagnostic evaluation, therapeutic work, treatment, etc.?”

Once a medical record has been completely reviewed, coders must decide which code identifies the reason the patient was admitted and treated: What condition “bought the bed”?

But our work isn’t done after that. Are there any instructional notes or chapter-specific guidelines that give sequencing direction for coding? For example, if a patient is treated for decompensated diastolic congestive heart failure and also has hypertension, instructional notes within Chapter 9 of the ICD-10-CM manual, Diseases of the Circulatory System, give sequencing directives for the coding of these conditions.

“Decompensated,” according to Coding Clinic, Second Quarter 2013, indicates that there has been a flare-up (acute phase) of a chronic condition. I50.33 is the ICD-10-CM code for acute-on-chronic congestive heart failure. However, before assigning that code as the principal diagnosis, you must check the instructional notes directly under category I50 for heart failure. These notes, usually printed in red, give sequencing guidance for codes in this category.

Per the Official Guidelines for Coding and Reporting, “code first” informs coders that these conditions have both an underlying etiology and multiple body system manifestations due to that etiology:

“For such conditions, the ICD-10-CM has a coding convention that requires the underlying condition be sequenced first, if applicable, followed by the manifestation. Wherever such a combination exists, there is a ’use additional code’ note at the etiology code, and a ‘code first’ note at the manifestation code. These instructional notes indicate the proper sequencing order of the codes, etiology followed by manifestation.

To code for the hypertension, the instructional notes guide the coder to reference code I11.0 (hypertensive heart disease with heart failure). More instructional guidance following the code helps the coder correctly assign the principal diagnosis for this patient.

But we’re still not done. Are there any issues of Coding Clinic that give more information regarding the assignment of a principal diagnosis? In reference to the example above, congestive heart failure with hypertension, documentation guidelines for reporting these two conditions have changed for 2017.

The Third Quarter 2016 Coding Clinic reiterates the documentation requirements and sequencing by stating that “the classification presumes a causal relationship between hypertension and heart involvement.”

The preceding example is one of many. A coder can have more than one diagnosis that fits the definition of a principal diagnosis, or possibly two diagnoses that are contrasting (either/or). If there are no chapter-specific guidelines for sequencing (is the patient pregnant? Does the patient have an HIV-related illness?), then refer to Section II, subsections B, C, D, and E, in the ICD-10-CM coding guidelines.

Editor’s note: This article originally appeared in JustCoding. Commeree is a coding regulatory specialist at HCPro in Middleton, Massachusetts. Contact her at Opinions expressed are that of the author and do not necessarily represent HCPro, ACDIS, or any of its subsidiaries.


Book Excerpt: Listen to the butterflies


CDI Field Guide to Denials Prevention and Audit Defense

By Trey La Charité, MD, FACP, SFHM, CCDS

CDI professionals need to take seriously those fluttering feelings found in the pit of the stomach when anxiety arises.

Experienced coders often have what may feel like to the uninitiated as a sixth sense about compliant code assignment. Such professionals employ the breadth and depth of their experience to apply a wide range of coding guidelines to a particular scenario. So when the coding team expresses concern about a medical record’s final coding summary, wise CDI professionals take heed. Likewise, as a CDI professional’s experience grows and he or she becomes familiar with the coding system, common claims denials, and Recovery Auditor targets, they too will develop some degree of extrasensory auditor perception.

Overtime, coders and CDI professionals come to know problematic areas. Facilities that neglect to harness this level of expertise miss a tremendous opportunity to prevent denials before they’re issued.

As a wise man once said, “If it doesn’t pass the smell test, don’t code it.”

When such situations arise, CDI program administrators should take every effort to appease those butterflies.

For example, the 2013 ACDIS/AHIMA Guidelines for Achieving a Compliant Query Process included an addendum recommending facilities develop a query escalation policy. The samples offer suggestions for CDI and coders to bring questions of clinical validity to a manager or steering committee for review.

Many CDI programs also create a reconciliation policy to handle any discrepancies between CDI and coder opinions regarding documentation and coder of a particular medical record. Effective programs establish collaborative methods of communication between the two departments, allowing both teammates the opportunity to ask each other questions and share information supporting their opinions. When unable to reach consensus, the case may get bumped to the coding/HIM manager and CDI manager/director to discuss or for the final determination.

Editor’s note: This excerpt was taken from the CDI Field Guide to Denial Prevention and Audit Defense by Trey La Charité, MD, FACP, SFHM, CCDS.


Measuring the effect of HCCs, part 1

Editor’s note: This article originally appeared in the Revenue Cycle Advisor. For more information about Hierarchical Condition Categories (HCCs), read this article from the CDI Journal by Gloryanne Bryant, RHIA, RHIT, CCS, CCDS. To read the second part of this article, come back to the blog next week. The views expressed do not necessarily represent those of ACDIS or its advisory board.

Evolving reimbursement methodologies and regulations can make it difficult for an organization to prepare for the future. Some may choose to stick to current processes but savvy organizations should be looking ahead. Risk-adjusted and value-based models are the future of reimbursement, for both commercial and government payers. Organizations must keep the doors open today while building a solid foundation for the years to come.

These changes and challenges require organizations to pay attention to a sometimes neglected coding topic: hierarchical condition categories (HCC). HCCs are the basis for risk adjustments for reimbursement models like Medicare Advantage, accountable care organizations (ACO), and other value-based purchasing measures such as Medicare Spending Per Beneficiary. Poor understanding and application of HCCs mean that a hospital’s patients may be much sicker in reality than they appear to be on paper. And that will hit reimbursement hard.

Because HCCs generally apply to only certain patient populations, identifying those patients from the start can help focus efforts. Work with information systems, EHR vendor, and front desk staff to ensure an understanding of the financial classes or insurance plans for Medicare Advantage patients. It can sometimes be difficult for a provider organization to pin down the impact of HCCs because it’s less straightforward than other models, says Monica Pappas, RHIA, president of MPA Consulting, Inc., in Long Beach, California. Medicare Advantage payments are calculated once a year and the rate is set by CMS, communicated to the payer, and then to the provider via contract.  “The complexity comes from the fact that all of the hospital’s inpatient and outpatient data, plus the professional data is merged at the health plan and then scrubbed and ultimately submitted to CMS,” says Pappas

CMS analyses the data. The agency then determines what the yearly payment will be for a patient based on that patient’s particular set of aggregated data.

Some organizations may not even be aware of how HCCs affect Medicare Advantage payments, says James P. Fee, MD, CCS, CCDS, vice president of Enjoin, Collierville, Tennessee and a hospitalist at Our Lady of the Lake Regional Medical Center in Baton Rouge, Louisiana. If an organization did not have a risk-bearing contract with its Medicare Advantage payer, it didn’t need to know about HCCs. The onus would be on the payer to drive risk scores to determine capitated rates and prospective payments with CMS for the fiscal year. But new reimbursement models are changing the game for providers. Health Care Options (HCO), ACOs, and the Merit-based Incentive Payment System (MIPS) all use HCC risk adjustments. Providers taking part in these programs are suddenly getting interested in HCCs, Fee says, but they may have more to learn than they realize.

“HCCs are going to be the next greatest impact for CDI, whether that be determining a capitated rate and prospective payment models such as Medicare Advantage, to some of the next gen ACOs and ACOs in general,” Fee says. “HCCs run the gamut if you look at the industry in general. It’s a changing world for organizations because if you haven’t been in this space then you’re not quite aware.”