Advanced Revenue Cycle Analytics: An Overview

As Risk Adjusted Coding gathers steam, I get more questions about HCC coding.  Today, we are going to look at some specific strategies for improving HCC Coding for revenue cycle staff.  Many coders do not have a lot of experience with HCC Coding.  The term HCC Coding may be new, but the concept is probably familiar.  HCC Coding is the preferred methodology for measuring patient acuity.  The two major components of a patient’s HCC score are demographic factors + diagnosis history.  If you need it, here is a refresher on the basics of HCC Coding.

Revenue Cycle staff and coders play a vital role in protecting physician productivity and helping their practices to transition smoothly to the value based world by improving HCC coding.  The “golden rule” of coding still applies, if it isn’t documented it didn’t happen.  Most practices (over 52%) self report that physicians do a good job of documenting comorbidities.  Before coders or revenue cycle staff can improve HCC scores, practices must improve HCC Coding clinical staff.   The three strategic pillars for clinical staff are education, documentation and coding.

The top three areas revenue cycle staff can improve HCC coding are review documentation for HCC diagnosis codes, identify patients with lower than expected HCC diagnosis codes and identify patients with expiring HCC diagnosis codes.

Understanding HCC Diagnosis Codes

This is not a new code set.  There are some ICD-10 codes that carry HCC values and other that do not.  Common diagnosis that have HCC weight are chronic conditions that have an impact on healthcare costs.  A few examples of ICD-10 codes with HCC weight are diabetes, heart failure, COPD and morbid obesity.  These diagnosis may not be primary conditions that your physician is treating, but they are chronic conditions that have a significant impact on the expected healthcare costs for these patients.

I recommend doing an anlaysis of your diagnosis patterns to identify which HCC diagnosis codes your practice uses most frequently, and identify any coding patterns that differentiate between your physicians.  I have seen several examples of physicians within the same specialty and the same practice where the difference between their average HCC score is over 200%.  Does that mean that one doctor sees patients who are twice as sick as the other physician?  No!  It usually means they code comorbidities differently!

Review Documentation for HCC Diagnosis Codes

Most physicians do a good job of documenting comorbidities (52%) but a bad job of coding comorbidities (18%).  This means that practices are under representing patient acuity on at least 3 out of every 10 patients.  The question for revenue cycle staff is which 3?

Coders could take a”brute force” approach and review every encounter looking for HCC diagnosis codes that are documented, but not coded.  However, this is terribly inefficient and a waste of already limited resources.  The key is to identify encounters that are the most likely suspects.  The obvious place to start is Medicare patients, because Medicare uses HCC codes for Cost Measures under MIPS.  The second most logical area to review is Medicare Advantage plans or commercial plans using risk adjustment.

Practices who want a more targeted approach to improve revenue cycle outcomes can target only patient encounters with one of the plans listed above that do not already have any HCC comorbidities.

Identify Patients with Lower than Expected HCC Score

HCC Coding veterans know that the average Medicare patient has an HCC score of 1.0.  Any patient with an HCC score of less than 1.0 is healthier than the average Medicare patient.  Your revenue cycle team may decide to review documentation for any Medicare patient with an HCC score less than 0.9, or you may want to review only certain targeted patients with an HCC score below a certain threshold.

One example of how to use HCC scores in your revenue cycle process comes from an orthopaedic practice I worked with recently.  This group negotiated with a local commercial health plan for a negotiated rate on total knee replacements.  The payment was not fixed based on a capitated rate, but was indexed based on patient risk adjustment.  This means the negotiated rate was multiplied by the patient HCC score to get the reimbursement for that particular patient.  I am going to use rounded numbers to make the math easy 🙂

  • Healthy Patient (HCC Score = 0.8 ) x $40,000 = $36,000 Risk Adjusted Rate
  • Average Patient (HCC Score = 1.0) x $40,000 = $40,000 Risk Adjusted Rate
  • Sick Patient        (HCC Score = 1.2) x $40,000 = $48,000 Risk Adjusted Rate

This group wants the revenue cycle team to review any patient on that specific with a total knee replacement, who had an HCC score of less than 0.95.  A low HCC score is not necessarily bad, as long as it accurately reflects patient acuity.

Identify Patients with Expiring HCC Diagnosis Codes

Medicare requires diagnosis codes to be coded in the current calendar year for them to be considered under the CMS HCC model.  This means that unless revenue cycle staff pay attention, diagnosis codes can fall off of the HCC calculation.  Again the goal is to accurately reflect patient acuity, so that payers do not think patients are healthier than they actually are.

Automated rules that can identify diagnosis codes with HCC weight that exist in the patient history, but have not been coded in the current calendar year are very valuable.  This makes sure that practices are not fighting an unfair battle on Cost Measures.  It also provides coding staff with a tool to make sure they are as efficient as possible!