• AHAP Inc.

Value of HCC Coding

In today's healthcare industry, it is important for medical practices to understand the concept of risk-adjustment coding.


Shifting Risk Adjustment

Risk adjustment is the process of modifying payments and benchmarks to reflect the degree of illness, which in turn allows the Centers for Medicare & Medicaid Services (CMS) to estimate future spending and allows providers to understand the health characteristics of their managed population. Failure to follow diagnosis coding guidelines can cause an incorrect risk level to be assigned to the patient, which can impact future payments.


How Risk Adjustment Works

Insurance companies reimburse physicians for services performed. If chronic conditions are properly documented and coded, CMS pays the insurance company for the patient based on the patient’s risk adjustment score. If physician practices do not document or correctly code chronic conditions, this deprives the insurance company and the physician of accurate reimbursement when those conditions contribute to the level of medical decision making and services provided.


Improving HCC coding Performance

Having accurate HCC coding is extremely important for many reasons. Not only does it affect healthcare outcomes, but it can also have an impact on your bottom line. Physicians should report any chronic conditions that are documented and may have an influence on patient care. Failing to report a documented diagnosis could skew the patient profile and negatively affect funding for the care and attention to those missed diagnoses. Accurate coding under risk adjustment models is essential to characterize risk, enhance shared savings, and provide patient-centered care. It is important for practices to:

  1. Create an accurate list of problems: When trying to improve HCC coding and risk adjustment it is important that you have an accurate problem list. Practices should be familiar with the most prevalent HCCs, identify the codes most relevant to them, and ask physicians to focus on these conditions.

  2. Ensure patients are seen every calendar year: You should always be able to identify patients with chronic illnesses that have not been seen during the current calendar year.

  3. Document Chronic Conditions even if not Treating them: Even if the physician is not seeing a patient for a chronic condition, it should be documented.

  4. Educate Providers: Physicians should be educated on how risk-based contracts work and the importance of HCC coding and the need for proper documentation for patients with chronic conditions. Clinic staff should also be educated about the tools and workflows for patient management and reporting.

Conducting an Annual Review

Performing an annual audit is a great first step toward improving practice’s revenue cycle. In an audit, documentation for each date of service must support the diagnoses reported. Often during an audit, patients are found to have many conditions, which were not known or not reported previously on claims. This leads to an underpayment and limited resources to cover the costs of that patient’s care.


When done correctly, HCC coding allows for better patient management and appropriate reimbursement from payers. Expert medical coding services can go a long way in helping providers achieve this goal.

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