Last week, we launched our new ‘What in the Health IT’ blog series and explained the meaning of Hierarchical Condition Category (HCC). Here, chief medical officer Dr. Rich Parker provides tactical guidance to providers who are in HCC-based payment models.

Hierarchical Condition Category (HCC) is a risk-based payment methodology designed to lower health plan expenditures for Medicare Advantage patients with serious or chronic illnesses.  HCC is intended to provide a way to appropriately compensate providers who care for these higher-risk patients.  With this incentive, providers are more likely to take on patients with complex needs.   Those patients are then more likely to get the ongoing care they need – and less likely to develop expensive complications.   In theory, this should reduce the overall cost of care.

Though the HCC system was implemented well before the transition from volume to value took the healthcare industry by storm, provider organizations are increasingly turning to this model to ensure accurate reimbursement rates and improve health outcomes for high-risk patients in their Medicare population.

The key to ensuring accurate HCC payments is accurate data capture. And the reality is that Medicare Advantage plans and their aligned providers are missing out on reimbursement payments because of difficulties capturing data in a complete and efficient way. In fact, according to an Arcadia analysis from 2013, HCC capture can be diminished by as much as 30 percent. This means large Medicare Advantage plans with 50,000+ members are seeing lower capitation adjustments from the Centers for Medicare & Medicaid Services (CMS), and are losing out on an estimated $30 million in additional reimbursement payments every year.

The good news is that providers can take action to capture better patient risk data for retrospective reporting – and use that data prospectively to better serve Medicare Advantage members (and ensure accurate revenue).  Arcadia recommends a few strategies to get the most out of the HCC methodology and ensure accurate payments.

Don’t rely solely on claims data for retrospective risk reporting

Every year, risk is reported to CMS via a Risk Adjustment Processing System (RAPS) submission.   Many organizations generate this RAPS submission using claims data.  Claims data contain a significant amount of information about a patient’s history – but still insufficiently represent patient risk.  Organizations that only use claims data for reporting may be significantly understating the risk of their patient populations – and thus receiving lower capitation adjustments.

EHR data may contain additional signed progress notes and assessments on encounters.  This information can be included in a RAPS resubmission for immediate upside.  For an organization with an integrated data asset that includes both claims and EHR data, this strategy can significantly increase retrospective returns while requiring almost no effort from providers.

Uncover and fix common documentation errors in chart reviews…

Chart reviews can be very useful in uncovering common documentation errors that impact both Medicare Advantage payments and potentially patient care.  A chart review process can offer a great opportunity to identify frequently made mistakes and to offer in-service education sessions with physicians and office staff to help reduce these errors. Leadership may wish to develop educational materials, such as training guides and reminder notes, to help improve documentation accuracy.

Once documentation gaps have been identified through chart reviews, they can then be corrected. For example, a physician caring for a patient with an amputated limb will need to document that condition annually in order to ensure that the patient’s risk is correctly reflected in the RAPS submission.  A chart audit can catch instances where that condition went undocumented.

…but use EHR data to make those reviews highly targeted and effective

However, chart reviews can be a tedious, scattershot process.   Random sampling results in a low hit rate, meaning that providers (or the plans with which they partner) expend significant effort and disrupt office operations for a relatively low yield.

The key to successful chart reviews is to develop a highly-targeted list of records to review, and the best way to do that is by comparing EHR data to submitted claims.  This kind of analysis can find patients who are much more likely to have gaps in their active problem lists, or in medications and prescriptions.   Using EHR data to develop a highly-targeted list means that the effort of a chart review is much more likely to result in opportunities to capture better data – and thus increase payments.

For this representative-but-fictional patient panel, any open box means that either EHR data or prior year claims data indicate that there is likely undocumented (open) risk associated with a given HCC condition.  A filled-in box means that that risk has been documented (closed).



Identify actionable risk assessment opportunities at the point of care

Closing data gaps for retrospective risk reporting is important to ensure that a practice is appropriately compensated for the care of high-risk Medicare Advantage patients.  But looking prospectively is even more important, both for ensuring accurate payments and delivering high-quality care.

As part of pre-visit planning, a care team should be looking for opportunities to make sure patient records are current with respect to medications and prescriptions, active problem lists, or places where prior year claims indicate that either an evaluation and management (E&M) code or an assessment might now be missing.  Having an accurate picture of a patient’s risk will support the care team in ensuring that the patient receives accurate services – whether they be labs or regular check-ins from a nurse care manager.  It will also ensure that risk is more accurately reported via the next RAPS submission, which then means more accurate payments for a given panel.

This fictional example patient has an upcoming appointment, and her provider has several opportunities to review and close HCC risk.



The bottom line

Moral of the story? Providers now operate in a world where rising medical utilization is in direct contrast to reduced CMS reimbursement payments.  In order to continue to provide effective care for the highest-risk members of a panel, providers need to be fairly compensated.  Focusing on HCC data capture enables providers to both eliminate gaps in care for Medicare Advantage members and maximize the accuracy of reimbursements. With the right training, tools, and motivation, provider organizations and health plans working with Medicare Advantage populations can ensure that a significant amount of money doesn’t go unclaimed.


Dr. Rich Parker - Arcadia's Chief Medical Officer

Dr. Richard Parker

Dr. Parker serves as chief medical officer for Arcadia with overall responsibility for the design and implementation of clinical strategies, input into the roadmap and development of Arcadia’s technology and service programs, thought leadership in support of providers transitioning to value-based care, and strategic advisory work for physician leaders at Arcadia’s clients.

Previously, Dr. Parker was an internist with a 30-year history at Beth Israel Deaconess Medical Center. From 2001 until 2015, Dr. Parker served as the medical director and chief medical officer for the 2,200 doctor Beth Israel Deaconess Care Organization. He oversaw the physician network evolve from a fee-for-service payment system to a nationally recognized global payment pioneer Accountable Care Organization. Dr. Parker’s other areas of expertise include end of life care, medical malpractice, care of the mentally ill, electronic medical records, and population health management. Dr. Parker served as assistant professor of medicine at Harvard Medical School. Dr. Parker graduated from Harvard College in 1978, and the Dartmouth-Brown Program in Medicine in 1985.

Dr. Parker is an in-demand speaker to associations, companies, and academic institutions on the topics of population health management, electronic health records, value-based care, and evolutionary, medical and business impacts of stress.

The Multi-Million Dollar Value of Clinically Enhanced Risk

Organizations that rely only on claims-based information to manage risk are at a disadvantage.  Enhancing claims-based information with rich, high-quality clinical detail from the EHR improves accuracy of risk calculations and associated risk-adjusted premium payments.  An organization with 50,000 or more Medicare Advantage beneficiaries may be leaving $29M on the table by only using claims-based data. 

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