How HCC Coding Reviews Help Optimize Reimbursement and Improve Outcomes for High-risk Populations
Just 5% of the nation’s population accounts for close to half of all healthcare spending with the top 1% incurring more than $130,000 a year in healthcare costs. What’s driving this disparity? One reason is the increase in chronic diseases among Americans. The CDC estimates that 60% of adults in the U.S. have one chronic condition and 40% have two or more. Today, 90% of our country’s $4.1 trillion in medical spending goes to individuals with chronic or mental health conditions.
Another trend driving excessive costs is our aging population. According to the National Council on Aging, 49 million adults in the U.S. are aged 65 or older. That number is expected to double by 2060. When it comes to chronic conditions, 70% of Medicare beneficiaries have at least two or more. And the conditions older individuals have are typically more complex and more expensive to treat.
As our nation ages, chronic conditions—and the cost to treat them—could skyrocket.
The increasing costs of treating chronic conditions are one of the primary drivers of value-based care (VBC) and Hierarchical Condition Category (HCC) coding. What is HCC Coding? HCC coding is the CMS risk-adjustment payment model that enables more effective projections of future costs for certain Medicare Advantage, Medicaid, and ACA members with acute or chronic conditions. Incentivizing providers to keep higher-risk patients healthier can help drive down costs and improve outcomes.
But with growing regulatory requirements and ongoing staffing challenges, it can be difficult for payers and providers alike to identify, monitor, track, and measure the health of high-risk populations and achieve the goals of HCC coding. Penalties for not doing so, however, can lead to significant “takebacks” from the Office of Inspector General (OIG) and the Department of Justice (DOJ). HCC coding audits uncover millions in overpayments each year.
Audits from any government agency are burdensome and resource intensive. The consequences of not being prepared are high, especially for HCC coding audits. This is why it’s so important to reduce poor quality and inconsistent documentation, while also looking for opportunities to improve risk stratification of the highest-risk patients.
A more effective long-term strategy
As our nation ages, the prevalence of chronic conditions will continue to grow, as will participation in Medicare and MA plans. To achieve optimal reimbursement and quality outcomes, payers and providers need an effective strategy for HCC coding. One of the best approaches is to leverage risk-adjusted coding analytics to identify opportunities for improving documentation and HCC coding quality. Risk adjustment coding reviews can help.
There are three types of risk-adjusted coding reviews. Each has benefits and shortcomings. Payers and providers must work together on reviews to proactively prevent issues that impact compliance.
Retrospective reviews. For payers, retrospective reviews are often the only option. This review process is performed on charts post-encounter looking at patients who should have had HCC coding but didn’t, as well as to identify those HCCs that were captured but were not properly documented. The benefit of retrospective reviews is that they are fast and relatively easy to perform. And the information discovered can be used to create a learning opportunity to help providers and their staff improve coding in the future. The downside is that this review process looks backward, after claims have already been submitted so there’s no way to recover lost revenue or avoid potential takebacks.
Concurrent reviews. In a concurrent coding review process, coders review the medical record and HCC codes in real time before the claims are submitted to payers. The benefit of the concurrent review process is that it happens before the claims are submitted so there is still time to correct the coding in order to achieve maximum reimbursement. The downside is that the timeframe to fix the documentation and stay in compliance with the claim submission deadline is very short.
Prospective reviews. The most beneficial review process is the prospective review because it yields the best results. In the prospective review process, chart reviews happen before the patient visit. Pre-visit planning helps identify high-risk patients so the encounters can be properly documented for HCC coding. It also supports the creation of the most appropriate care plan for the best outcomes.
Whether retrospective, concurrent, or prospective, risk-adjusted coding reviews help improve coding quality, care plan efficacy, outcomes, and reimbursement. It’s a win-win for patients, payers, and providers.
Driving value, lowering costs
It can be difficult for payers and providers to find the resources needed to perform risk-adjusted reviews. But the challenges go even beyond staffing. Many organizations simply do not have the level of HCC expertise or the risk-adjustment technology needed to perform the reviews in a way that achieves the best results.
Partnering with HCC coding and risk-adjustment experts can help. The best partners are those that work with both payers and providers and those that have broad expertise with MA, ACA, and Medicaid. These vendors have unique insight into the challenges, requirements, and operations of all stakeholders, which enables them to deliver greater value and better results.
Omega Healthcare can help.
Omega Healthcare is a leading provider of risk adjustment coding services to providers and health plans with commercial ACA, Medicaid, and Medicare Advantage lines of business. Omega Healthcare’s risk-adjusted HCC coding creates more accurate documentation of member demographics, health conditions, and health status, which results in better per-member cost calculations and more optimal compensation.
Omega Healthcare’s HCC Coding Review Services include retrospective reviews after treatment, concurrent reviews during hospitalization, and prospective reviews for new member encounters.
- 650 HCC coding specialists
- 5 million member charts coded each year
- 60% average savings on each chart reviewed
- 98% coding accuracy
- Leading provider of HCC coding services for Medicare Advantage plans
Learn more about how Omega Healthcare can help organizations improve risk-adjusted coding and achieve HCC compliance. Download the whitepaper “Best Practices to Achieve HCC Compliance” [PDF]
 “How do health expenditures vary across the population?” Jared Ortaliza, Matthew McGough, Emma Wager Twitter, Gary Claxton, and Krutika Amin, Peterson Center on Healthcare and KFF, November 12, 2021
 “Health and Economic Costs of Chronic Diseases,” Centers for Disease Control and Prevention, accessed via web December 13, 2022
 “Get the Facts on Healthy Aging,” National Council on Aging, January 1, 2021
 “Millions in Medicare Advantage overcharges revealed in audits,” Jeff Lagasse, Healthcare Finance News, November 28, 2022