HCC Medicare Advantage background and overview

YES HIM Consulting

As a follow-up to our previous article “The HCC Coding Specialist: Benefiting payers, providers, and patients” we now delve in deeper to the background and overview of HCC risk adjustment for the Medicare Advantage Program.

Background on Payment in the Medicare Advantage Program

The Medicare Advantage (MA) program allows Medicare beneficiaries to receive Part A and Part B benefits from private insurers, otherwise known as Medicare Advantage Organizations (MAOs) that contract with the Centers for Medicare and Medicaid Services (CMS) to provide benefits as an alternative to the traditional Fee-for-Service (FFS) Medicare program. There has been a steady increase in Medicare Advantage enrollment as a proportion of total Medicare enrollment. In 2003, only approximately 13% of the Medicare population was enrolled in a Medicare Advantage (MA) plan. In 2014, Medicare Advantage (MA) enrollees accounted for 30% of all Medicare beneficiaries.  And in 2018, MA enrollees grew to 36% of all Medicare beneficiaries (source: cms.gov).

MA enrollees

Hospital Enrollment Trends

CMS pays each Medicare Advantage Organization (MAO) a monthly per-person amount for each beneficiary enrolled in its plan. The plan payment rates are determined by the plan’s bid, which is submitted to CMS on an annual basis. The per-person amount paid to each plan for enrolled beneficiaries is adjusted to account for differences in health status between enrolled beneficiaries. This is referred to as “risk adjustment” model, and was authorized by the Balanced Budget Act of 1997 (BBA). From 1997 to present, there have been several different types of risk adjustment models.  But, in 2004, CMS selected a new risk adjustment model to begin using for payment: Centers for Medicare & Medicaid Services (CMS) Hierarchical Condition Categories (CMS-HCC) model, which includes diagnoses recorded on professional, inpatient, and outpatient claims.

CMS-HCC Model overview

The CMS-HCC model is prospective where data is collected in the base year to determine expected costs for the following year (the “prediction” year). For example, data from 2019 (base year) will be used to predict expenses in 2020 (prediction year). Each segment of the CMS-HCC model relies on data from demographics (i.e. patient’s age and gender) and health status, based on ICD-10-CM diagnosis codes, to predict costs.   To identify the disease diagnoses that predict future healthcare costs, HCC models first organize diseases/conditions into body systems or disease processes, called diagnostic groups (DXGs). The disease processes within each diagnostic group (DXG) are further organized into condition categories (CCs) and then delineated into the HCC. ICD-10-CM diagnosis codes are ranked into categories that represent conditions with similar cost patterns. There are over 9,500 ICD-10-CM codes that map to one or more of the 83 HCC codes included in the 2019 CMS-HCC Risk Adjustment Model (Version 23).

Here’s an example of HCC categorization:

HCC categorization

NOTE: HCC 88 Angina Pectoris is a payment HCC. However, it is excluded from the clinical vignette for this patient since HCC 88 is in the same hierarchy as HCC 86, which is more severe (more at: https://www.cms.gov/)

The CMS-HCC model focuses on long-term chronic conditions such as diabetes, autoimmune disorders, end stage liver disease, end stage renal disease, chronic obstructive pulmonary disease (COPD), and congestive heart failure (CHF) that impact the probability of future healthcare costs. The CMS-HCC model does not include acute illnesses and injuries that are not reliably predictive of ongoing healthcare costs.

Coding professionals need to review the entire medical record documentation to assign appropriate ICD-10-CM diagnosis codes.  Most chronic conditions are assigned to an HCC.  HCC categories report all conditions that affect the patient’s health status concurrently across the continuum of care.  To support an HCC, medical record must support the presence of the disease/condition and also include the clinical provider’s assessment and/or plan for management of the disease/condition. Most organizations use the “M.E.A.T” criteria:  Monitoring, Evaluation, Assessment, Treatment for their documentation practices as well as ICD-10-CM diagnosis coding and HCC assignments.

This article successfully covered how the complexity of documentation, coding, and the patient’s ICD10-CM diagnosis codes can have an important impact on HCCs. Accurate diagnosis coding is essential for appropriate risk adjustment which drives the most suitable reimbursement for physician services. Be sure that your clinical providers and coders are educated about HCC documentation and coding!  Additional articles will be presented on the YES blog.

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Medical Coding Classes and the Importance of a Coding Education

Mari Cely

Medical coding and health information management can be an extremely rewarding and lucrative field, which makes the value of a coding education, priceless.

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Best Practices for Providing Your Team with Valuable Coding Education

Mari Cely
Ongoing coding education has proven to be a necessity in terms of keeping up with the industry’s constantly-evolving learning curve, but how do you ensure your organization is receiving the proper coding education that it needs?

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Inpatient Prospective Payment System (IPPS) 2020 Proposed Rule: A Detailed Overview

Mari Cely
The 2020 Proposed Rule for the Inpatient Prospective Payment System (IPPS) CMS-1716-P, was released April 23, 2019. This rule discusses many changes related to reimbursement, and also releases the proposed ICD-10-CM and ICD-10-PCS 2020 codes.

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YES Spearheads Automated Education Initiatives in 2019

Mari Cely
Automation has revolutionized the healthcare industry, making day-to-day processes more practical and cost effective across the board. It is no surprise that automated education within the healthcare industry has quickly followed suit, making HIM education easily accessible at the hands of prospective learners.

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Value-Based Care: Trends and Challenges in Revenue Cycle Management

Mari Cely

The effectiveness of value-based care models is measured based on how this type of reimbursement can improve the quality of a patient’s overall health. Reducing hospital readmissions and improvement in preventive care are good examples of critical factors to assess the effectiveness of these models. U.S. legislation is clearly moving towards the adoption of value-based care models; in 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) put into place multiple quality programs under the new merit based incentive payments system (MIPS). The Health & Human Services Department (HHS) established the objective to convert 30% of Medicare charges into value-added payment models by the end of 2016. By 2018, the Agency’s objective was to make a transition to 50 percent of conventional payments.


Future trends

Revenue Cycle Management (RCM) systems will eventually assist the industry in transitioning from fee-for-service to value-based reimbursement. The analytics of many of these RCM systems enable payers and providers to look at their patient population in more detail, such as the number of chronic disorders in their patients, allowing payors and providers to monitor claims data and identify potential abnormalities.

Revenue cycle managers are betting on data analytics to try to improve every phase in the revenue cycle process, in order to eventually obtain more cash flow from each phase. Information is being consolidated and evaluated to drive business process changes across the revenue cycle process, from scheduling appointments to claims denials. RCM systems will in due course, streamline routine processes such as claims processing and payer denials prevention.


Future Challenges

Challenge One: Lack of integration

Revenue cycle managers work with historical data from differing financial and clinical information systems. However, many hospitals and health systems have not been integrated to this level. The number of disparate information systems can continue to increase when hospitals merge and purchase physician practices and other healthcare entities. The incorporation of data from external sources canalso contribute to the challenges of standardization. Large-scale analytics is still a considerable challenge, resulting in a lack of an all-inclusive view of a patient’s record.

Challenge two: Lack of preventive education

Many reimbursement problems arise from human errors, such as incorrect coding, missing items on a patient's account, and problems with insurance eligibility. Health organizations that proactively promote appropriate coding techniques, comprehensive chart documentation, and financial policy reinforcement, have consistently reduced turnover and medical errors, which results in a reduced amount of denied claims.

 Value Based Care

Challenge three: Lack of visibility and control on claim submission-denial process

Following up on a claim throughout its lifetime is another major challenge for healthcare revenue management. Healthcare professionals should closely monitor claims processes to identify errors. Revenue may be lost unless providers can identify where problems arise and quickly resolve mistakes. Providers can usually receive automated alerts or have a dedicated data analysis resource to produce custom and automated reporting, with the objective of identifying why payers deny claims for certain methods or codes routinely.

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The Changing Seasons Bring the Beginning of ICD Code Revisions

Brandon YES-HIM-ED

Depending on your location, the spring season brings warmer temperature, green grass or maybe even hurricanes. But wherever you are, spring brings the first sign of new ICD codes that will be implemented in the fall.

We first see the changes in the Proposed Rule for the Inpatient Prospective Payment System, published in the Federal Register, in April. Part of this Rule is the list of code changes for both ICD-10-CM diagnosis and ICD-10-PCS procedure codes. As with all Proposed Rules, there is an assigned period for comments from the public. The Final Rule is published in the summer, these include the final code changes. 

ICD Code Revisions

All changes are effective on October 1st; the first day of the federal government’s fiscal year- this year is FY 2020.  The official addenda for the ICD-10-CM and ICD-10-PCS code sets that include details of all the Tabular and Index changes are also released in the summer, as are any updates to the Official Coding Guidelines for both systems. Coding professionals learn about the new codes and guidelines in time for fall implementation on October 1st.

Though we are just seeing these changes in the spring and know that we must learn about them and be ready to implement on October 1st, we may wonder, where did these come from?  And how might we influence the changes ourselves?  All code changes begin at a federal meeting that we are all invited to attend, free of charge. Attendants can also watch and listen in live while the meeting is taking place, recordings of the meetings can be also found on Youtube.

What is this meeting that starts a code change? It is the Coordination and Maintenance Committee (C&M). Code revisions, including additions and even deletions are introduced at the C&M Committee meetings. Held in September and March, in Baltimore, Maryland, these are public meetings co-chaired by the Center for Medicare and Medicaid Services (CMS) and the National Center for Health Statistics (NCHS). Anyone can attend and participate in these meetings, and advance registration is required. Proposals are introduced, with rationale and recommendations for how the code set should be changed, these suggestions come from various sources; professionals in the field, questions that have been submitted to Coding Clinic and internal review within CMS and NCHS. 

The committee meets for two days and generally the procedure proposals for ICD-10-PCS are presented on the first day, with the ICD-10-CM diagnosis proposals on the second day. The meetings feature live presentations, often from the persons or organizations that are proposing the change.These can be fascinating presentations chock full of clinical information and for the PCS proposals, information on the newest technology and procedures being performed. There is discussion on the need for the new code, current coding practice and proposals for changes to the codes. Members of the audience can ask questions of the clinical presenters or CMS and NCHS staff during the meeting, phone lines are open to accept questions from those watching the sessions online. Participants and other interested parties are encouraged to submit comments for consideration in writing to the NCHS for diagnosis codes and CMS for procedure code updates. No official decisions are made at this meeting, the final decisions on code changes are made by NCHS and CMS.

The Coordination and Maintenance Committee Meeting – March 2019

The most recent C&M meeting was on March 5-6, 2019. Comments on topics covered in these meetings are due by April 5, 2019. During the procedure session, several topics were discussed, see the agenda packet for more information here.

ICD Code Revisions

A great example of how these meetings work:

One of the topics was the use of a flow diverter stent to treat unruptured intracranial aneurysms. Unlike a traditional stent that holds vessels open, this mesh-like stent is inserted across the neck of aneurysm to divert blood away. As time goes by the flow diverter device causes thrombosis within the aneurysm and tissue scaffolding across the neck of the aneurysm itself. This device eliminates the need for coiling of the aneurysm and has been found to be an effective stand-alone procedure. Since the objective of the procedure is to partially close the lumen of the tubular body part, the Restriction root operation is used. One of the proposals included adding a new device value to the 03V table for Restriction of the upper arteries. Commenters and CMS indicated that they approved of this proposal. The final decision will be made by CMS on the potential new device value and the timing of any change.  

In the diagnosis portion of the meeting, several proposals were discussed, see the agenda for more information: https://www.cdc.gov/nchs/data/icd/Topic-packet-March-2019-Part-1.pdfhttps://www.cdc.gov/nchs/data/icd/Topic-packet-March-2019-Part-2.pdf.

This is just a sample of the discussions from the March 2019 C&M meeting. We will not know until the Proposed rule, whether these proposals or those from earlier C&M meetings will officially become code changes for FY 2020. What we do know, is that almost any code change gets its start at the C&M meeting. And as the seasons change, so do our ICD codes.


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EHR: One Step Forward, Two Steps Back?

Brandon YES-HIM-ED

Electronic health records were projected to make some pretty big waves in terms of change in the healthcare industry. In setting major goals of bringing higher quality care, making medicine safer, empowering patients and being more cost-effective, this new method had some pretty big shoes to fill. For some, these promises almost sounded too good to be true; and many would agree that it was. $36 billion dollars later and over a decade after President Obama signed a law to push the digitization of medical records, the return is much lower than expected. Instead of the promised electronic network of information, the nation’s countless EHR systems remain a vastly detached and disjointed mess. To make matters worse, the effort has tied healthcare providers to the use of a system they dislike, while funneling money to the industry that sells it.


The widespread adoption of electronic health records across the United States is one area in which these efforts succeeded. From only 9% in the year 2008, to a staggering 96% adoption rate today, it is obvious that the high hopes people had for EHR’s helped this number skyrocket over the past decade (Fortune.com, 2019). Unfortunately, what was received were non-user friendly, faulty and unintuitive systems that instead caused physicians to spend more time trying to navigate them than time spent with their patients. What turned out to be one of EHR’s biggest downfalls is the fact that these seven hundred plus vendors don’t talk to one another- meaning data cannot be transferred throughout the varying systems. This huge misstep really started becoming prevalent when countless incidents started occurring where patients lost their lives due to critical or time sensitive information (Allergy documentation, test orders, lab results) going unnoticed; highly important patient information buried in vast amounts of electronic data.

Light at the end of the tunnel?

The promise of electronic health records transforming the very way the healthcare industry works, was an immensely optimistic one. With the black cloud that has been formed over the past decade hanging over the concept of EHR, is there any hope for the future of electronic health records?

The answer is yes.


With advances in technology continuously growing and showing no signs of slowing down in the near future, researchers are looking towards four main concepts to pick up where EHR left off.

FHIR: Pronounced “fire”, FHIR is an open API that allows for more fluid health data exchange. As health IT and electronic health records continued to be plagued by translations problems, FHIR emerged in 2014 as a draft standard for trial use to enable health IT developers to more quickly and easily build applications for EHRs and to exchange and retrieve data faster from applications.

Voice Recognition: Most of our smartphones, PC’s, wearables and even our cars already have it- it only makes sense to utilize this ever-evolving technology staple in order to allow doctors to dictate speech instead of physically documenting their notation.

Mobile: Major HER vendors have already introduced mobile solutions that provide physicians with the ability to chart and record on portable touch screen devices and tablets.

Human Scribes: Technically not a new advancement, scribing, a method of recording that dates back thousands of years, is becoming more and more popular among doctors who are having personal assistants shadow them while taking notes- lightening their workload.


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Value-Based Care: Quality over Quantity

YES HIM Education

Value-based care is a method of reimbursement that links payments to the quality care provided and rewards the efficiency and effectiveness of providers. This reimbursement form has proven to be a possible alternative fee-for-service repayment model, which retrospectively pays providers for services delivered on the basis of billing or annual service fees. The Medicare & Medicaid Services Centers have introduced a range of valuable care options, such as the Medicare shared saving program and the pioneer accountable care organization models, in order to transform the way healthcare suppliers are reimbursed for services rendered. As a result, private payers have adopted similar accountable, value-based treatment models.

In short, value- based care models focus on the patient's results and the ways in which healthcare providers improve the quality of care using specific measures, such as hospital readmissions reduction and the use of certified IT services. As the ever-transforming healthcare industry takes its next step into pioneering new ways of delivering care, providers are left with one question; how is value-based care different from the traditional model and what are its advantages?

Value Based Care

Using the traditional (fee-for-service) model of reimbursement, healthcare providers are paid based upon the amount of services they administer. Because of this, trends show for more procedures to be performed and a higher number of tests to be ordered, increasing overall health care costs while not necessarily improving health care quality. In response to this, the federal government designed value-based care programs to drive down healthcare costs and potentially improve patient outcomes. 

The new, value-based models encourage providers to use evidence-based medicine, engage patients, utilize health IT as well as data analytics in order to get paid for their services (recycleintelligence.com, 2016).

Types of Value Based Care

For many healthcare providers, value-based care is still a fairly new concept. As with any new process, it goes without saying that it will take some time to become fully understood, accepted and incorporated into the day-to-day workflow. But, with the huge potential to continue to decrease spending and improve quality of care, value-based care is definitely a method that isn’t going anywhere but up in the near future.

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Continuing Education: Employee Retention and Return on Investment

YES HIM Education

According to LinkedIn’s 2018 Workplace Learning Report, 94% of employees would stay at a company longer if it invested in their career (LinkedIn.com, 2018). This staggering percentage is just one major reason why more employers are making continued education in the workplace a top priority. In order to avoid employee turnover, managers are searching for different ways to keep their employees involved and satisfied, professionally.

Employee retention coding education YES HIM

A good initial step to take would be to make continuing education paramount, not just at the entry level, but throughout all levels of the company. In doing this, it is also important to identify training that will contribute to employees’ professional as well as personal growth. Training offered towards skills needed, and new skills of interest to the employee, has a positive impact on the employee’s development and motivation, with reinforced loyalty to the organization. An effective way to gather feedback from employees on training required (and desired) is to poll employees annually with a short survey inquiring what areas of business they would most like to improve in. After finding out the area in which the majority lies, come up with an activity or workshop and dedicate a day out of the month to implementing this into your employees’ schedules. This type of training can also be incentivized, in order to create a culture of accountability and make sure that managers and employees alike are following through with the task. 

Employee development coding education YES HIM

The health information management (HIM) and medical coding industries provide budget friendly resources like national and state level HIM conferences, free webinars with pre-approved continuing education units (CEUs), etc. These tools need as a system that allows team leaders and decision makers to have visibility on training being successfully adopted and implemented, tools that enable trainees to follow through and apply the training gained, resources that show a clear return on investment per training provided.

Employee retention coding and training YEE HIMManagers need to follow up on their team member’s attendance to education seminars, a previous-versus-current state analysis is needed in order to identify a positive or negative impact, online education tools need to provided automated reporting, certifications, and follow upper completed or non-completed course. It’s certain that, providing the right training is essential, but certainly not enough, if a true return on investment is required.

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