By: Julius Blum
Vice President, Solutions
Healthcare providers are looking to improve documentation and coding for outpatient encounters as these services increase. For organizations supporting large Medicare populations, much of this increased focus has been on Hierarchical Condition Categories, or HCCs. These are central to CMS’s risk adjustment model for use in predicting future health costs for patients served by Medicare Advantage plans (as well as ACO participation and some plans covered by the ACA). But for providers, mastering HCCs is crucial to optimizing reimbursement from today’s care, as well as safeguarding revenue from these patients going forward.
HCCs are based on diagnosis codes along with key patient demographic data. Using this information, CMS attempts to estimate the future cost to care for each patient by establishing a Risk Adjustment Factor (RAF) score for them. Supporting patients with greater needs will obviously require greater resources, and the RAF scores are intended to ensure payment levels are commensurate with the acuity of care required to treat that patient. A RAF score of 1 reflects an average patient with no chronic health issues or conditions. For patients with existing health issues, such as diabetes or COPD, the score will go up accordingly. CMS establishes an average score for each provider’s patient base and adjusts reimbursements accordingly. For instance, an average score of 1.1 for all covered patients will result in an additional 10% in payment to the provider.