The words “Hierarchical Condition Categories” or HCCs can conquer up some anxiety for HIM Coding, and Clinical Documentation Integrity (CDI) professionals, even for Revenue Cycle and Compliance leadership. Add to that, the word “audit” and we now have uneasiness and even fear.  Well, it does not need to be this way.  Understanding the HCC basics and the coding audit ins and outs can diminish everyone’s anxiety and fears and allow us all to see the many benefits to both.

The Medicare Advantage (MA) payment amounts are adjusted for the relative risk or risk factor associated with the individual enrollee’s demographic characteristics: age, sex, institutional status, and eligibility for Medicaid (or welfare) AND disease burden AND disease interaction (via ICD-10-CM coded data).  Due to the nature of the MA program, ICD-10-CM codes reported this year (2021), determine resource needs and payment for the next year (2022) and predetermines each year, meaning it is a prospective payment model. In the version 24 of MA there are approximately 9700 ICD-10-CM codes which map to 86 different HCCs, or about 13% of all possible ICD-10-CM codes.

Each HCC has a relative risk factor value or weight (similar to a MS-DRG relative weight). The weight or risk factor numeric figure is used in calculating the payment amount provided to the MA health plan to take care of a particular patient (beneficiary) for the year.  There can be multiple HCCs in a given patient encounter and they can be accumulative which really demands coding accuracy. Here are some of the MA HCCs:

 HCCTitle/Description RAF (weight) 
 HCC 1 HIV AIDS 0.335
 HCC 2 Septicemia, Sepsis, SIRS & Shock 0.352
 HCC 6 Opportunistic Infections 0.424
 HCC 8 Metastatic Cancer & Acute Leukemia 2.659
 HCC 9 Lung and Other Severe Cancers 1.024
HCC 10Lymphoma and Other Cancers0.675
HCC 11Colorectal, Bladder & Other Cancers0.307
 HCC 12 Breast, Prostate & Other Cancers & Tumors 0.150

In this list you see several HCCs for neoplasms, or cancers in bold, these represent hierarchical categories. Meaning that if a given patient has HCC 12 (breast cancer), HCC 11 (colon cancer) and HCC 8 (metastatic cancer), the risk adjustment payment is made to the highest risk factor for that group or categories, so of those three HCCs, only HCC 8 would result in risk adjustment reimbursement.

Coding audits have been a part of healthcare for over 50 years but due to reimbursement compliance concerns the importance of complete and accuracy coding is a foremost part of the healthcare revenue cycle. Complete, thorough, and specific clinical documentation is also vital to the accurate capture of ICD-10-CM and HCCs mapping.

There are many benefits to conducting a coding audit which includes but is not limited to the following:

  • Identifying and improving clinical documentation AND coding accuracy
    • Preventing and correcting regulatory scrutiny and potential compliance risks
    • Assisting with education and training (learning from mistakes)
    • Improving provider relationships
    • Supporting a culture of compliance
    • Identifying process and workflow improvements
    • Improvement in revenue and reimbursement
    • Overall data improvement which supports Risk Adjustment, Pay-For-Performance, Quality and Safety Metrics, Healthcare Surveillance, Disease tracking and Research.

Coding audits are really similar to “projects”, with a start and end, and as such can function better if approached that way.  This means having certain steps or components in place, starting with the planning and communication, followed by execution, then the reporting and ending with corrective action and next steps; each of these is essential for any HCC coding audit.

When auditing HCCs we need to confirm that the documentation demonstrates and supports that the condition/disease was monitored, evaluated, assessed and/or treated during the face-to-face  encounter.  Auditing can help to identify any documentation and/or coding gaps so they can be eliminated or improved upon.

The frequency and volume of the audit will need to be determined and having some volume data can help with this process. Having HCC audits at least twice a year, more often if there are patterns or trends in the coding variances is beneficial. Also, having a positive attitude about an HCC audit will help to set the tone for the auditors and your own staff. In addition, keeping the lines of communication open will also aid in having a successful HCC audit experience.   

HCC coding audits can be performed internally with your own audit staff/team, externally by a third- party consulting firm/team or both.  Often we see the industry best practice is to have “both” internal and externally conducted audits. Some will question why have an external audit? Having a third-party can ensure a non-biased audit, which can often uncover risks and issues that an internal audit does not see. In addition, an external audit often has a broader scope of resources and tools which aides in handling the perpetual and continuous changes in documentation and coding.

Now is the time to get organized and plan your next HCC audit!

Written by Gloryanne Bryant, RHIA, CDIP, CCS, CCDS, AHIMA Approved ICD-10-CM/PCS Trainer

References: Report to Congress: Medicare Advantage Risk Adjustment – December 2018 (cms.gov); 2022 Medicare Advantage and Part D Advance Notice Part II | CMS; HHS OIG Issues Report Critical of Medicare Advantage Risk Adjustment Practices | Healthcare Law Blog (sheppardhealthlaw.com); Billions in MA OEI-03-17-00471.pdf (hhs.gov); Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns (OEI-03-17-00470; 12/19) (hhs.gov)

To access RMC’s Compliance Connections Newsletter Qtr 1 2021 in pdf format click here