Hierarchical Condition Categories
HCC coding relies on ICD-10-CM coding to assign risk scores to patients. Each HCC is mapped to an ICD-10-CM code. Along with demographic factors such as age and gender, insurance companies use HCC coding to assign patients a risk adjustment factor (RAF) score. Using algorithms, insurance companies can use a patient’s RAF score to predict costs. For example, a patient with few serious health conditions could be expected to have average medical costs for a given time. However, a patient with multiple chronic conditions would be expected to have higher health care utilization and costs.
Why is HCC Coding Important?
How They Can Help You
Helps You Understand The Complexity:
Hierarchical Condition Category (HCC) coding is used to show how complex a patient’s health is and provide a complete view of their health. It helps predict how much medical care a patient might need. RAF scores, based on HCC coding, are also used to adjust quality and cost measures. This adjustment ensures that differences in patient complexity are considered when measuring quality and cost performance.
Risk Adjustment and Value-Based Payment:
Risk adjustment is crucial in value-based payment models, where a practice’s performance on cost and quality metrics determines revenue. When risk scores don’t accurately reflect patient complexity, it can make it seem like patients had higher costs or lower quality outcomes than expected. This can lead to practices missing out on shared savings or receiving lower payment rates in models like capitation, where payment is based on average patient risk scores.
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