Coding Corner: Risk Adjustment & HCC

Risk Adjustment (RA) is a payment methodology that was mandated by the Balance Budget Act of 1997 (BBA) to increase payment accuracy for Medicare Advantage Organizations (MAO), Affordable Care Act (ACA), and Accountable Care Organizations (ACO).

The RA model identifies patients with serious and/or chronic illnesses, using ICD-10-CM codes that map to hierarchical condition categories (HCC), and assigns a risk adjustment factor (RAF) score to each patient. Diagnosis included in the RA model are chosen to gain a clear picture of all current problems as they relate to clinical and/or prescription drug management.

The average RAF score for a patient is 1.000. Therefore, if a patient has a RAF score of .800 then it is presumed that patient is 20% healthier than the average population and you would generally not expect high-cost utilization.

The Centers of Medicare and Medicaid Services (CMS) resets the RAF score every January to only include demographics.
Failure to report each chronic condition, every calendar year, will skew the patient profile and negatively affect the funding for the care and resources required.

Documentation & Coding

The ICD-10-CM Official Guidelines for Coding and Reporting state that chronic diseases treated on an ongoing basis may be coded and reported as many times as the patient receives treatment and care for the condition(s).

It is also appropriate to code all documented conditions that coexist at the time of the encounter/visit and that require or affect patient care, treatment, or management. Do not code conditions that were previously treated and no longer exist. History codes may be used when applicable.

The American Hospital Association (AHA) advises that coding professionals should not assign codes based solely on diagnoses noted in the history, problem list, and/or a medication list. It is the provider’s responsibility to document that the chronic condition affected care and management of the patient for that encounter.