Updated on: November 28, 2016

Preparing for Risk Adjusted Payment Models: The Role of HCCs

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Original story posted on: November 4, 2016
While most legacy CDI programs have been doing a good job at preserving revenue under the MS-DRG system, a potential blind spot exists as Value-Based and Alternative Payment Models rely on the concept of Risk Adjustment to determine final payment in acute care. 

The Centers for Medicare & Medicaid Services risk adjusts patients within quality measure cohorts because the MS-DRG methodology is resourced based and fails to accurately represent patient acuity, which is heavily influenced by the cumulative effect of all existing diagnoses. 

A quick example of this is how a diagnosis of COPD may prolong the LOS (Length of Stay) or increase the likelihood of a readmission to the hospital in a CHF patient.

CMS has determined that use of the MS-DRG alone is insufficient to risk-adjust populations and uses a completely different tool to do this, called Hierarchical Condition Categories (HCCs).  HCC’s have been around in the physician setting for a while, but now they are starting to impact the hospital and ACO market as “risk adjustment” becomes more prevalent in the value-based payment world. HCCs are captured over the span of a year by documenting the highest disease categories for each patient’s conditions. HCC data is used to calculate an HCC risk adjustment factor (RAF) for an entire year of encounters across the continuum of care. Does your current documentation reflect accurate HCC risk scores for your patient population based on reported diagnoses?

So here’s where the blind spot for CDI Programs becomes evident.  Most of today’s CDI programs are focused completely on ensuring that MS-DRG’s are accurate and that all CC’s and MCC’s are supported in the clinical documentation as basis for their queries.  As such they are not focused on other secondary diagnoses which may have a significant impact upon the Risk Adjustment for a patient that may be indexed to one of the Value Based or Alternative Payment Models for future payment adjustment.
Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Chuck Buck

Chuck Buck is the publisher of ICD10monitor and is the executive producer and program host of Talk Ten Tuesdays.

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