And HCC Guide Risk Adjustment Coding And HCC Guide

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2021eplmSimplifying the RA/HCC systemsand optimization opportunitiesSaRisk Adjustment Codingand HCC GuideRisk AdjustmentCoding andHCC Guide2 0 21optum360coding.com

ContentsIntroduction .1Risk Adjustment Data Files . 2eChapter 1. Risk Adjustment Basics .5Key Terms . 5Payment Methodology . 6Purpose of Risk Adjustment . 6Risk-Adjustment Characteristics . 7Risk Adjustment Beyond Medicare Advantage . 8Comparison of Plans . 8Health and Human Services . 8Chronic Illness and Disability Payment Systems . 9Diagnosis Related Groups . 9HCC Compared to MS-DRG .11Programs of All-inclusive Care for the Elderly .12End Stage Renal Disease .13RxHCC .13Payment .13SamplChapter 2. Coding and Documentation .17Medical Record Documentation .18General Standards .18Acceptable Sources .19Signature Issues .21Coding Guidelines .21ICD-10-CM Guidelines .22Fee for Service vs. Risk-Adjustment Coding .24Linking Diagnoses .25CMS Participant Guide Excerpts .26On-going Chronic Conditions .27Recapture .29Code Set Updates .29Coding Guidelines Discussion .30Tools .30Coding Scenarios with RAF Values .33Coding Scenario 1—CMS-HCC Model .33Coding Scenario 2—CMS-HCC Model .36Coding Scenario 3—CMS-HCC Model .38Coding Scenario 4—CMS-HCC Model .41Coding Scenario 5—ESRD-HCC Model .42Clinical Documentation Improvement Education .45ICD-10-CM .47Queries .47Internal Risk Adjustment Policies .50Documentation Requirements .51Chapter 3. Audits and Quality Improvement .53Step 1 .53Step 2 .53Step 3 .53Step 4 .53Step 5 .53Step 6 .53Step 7 .542020 Optum360, LLCi

ContentsRisk Adjustment Coding and HCC GuideStep 8 .54Step 9 .54Medicare Advantage Risk Adjustment Data Validation .55mpleAudit Scenarios . 57Audit Scenario 1—CMS-HCC Model .57Audit Scenario 1 Rationale—CMS-HCC Model .59Audit Scenario 2—CMS-HCC Model .60Audit Scenario 2 Rationale—CMS-HCC Model .62Audit Scenario 3—CMS-HCC Model .63Audit Scenario 3 Rationale—CMS-HCC Model .67Audit Scenario 4—CMS-HCC Model .68Audit Scenario 4 Rationale—CMS-HCC Model .70Audit Scenario 5—ESRD-HCC Model .71Audit Scenario 5 Rationale—ESRD-HCC Model .74RAD-V Audit Steps .76Medicare Advantage Risk Adjustment Data Validation—RecoveryAudit Contractors .78Health and Human Services Risk Adjustment Data Validation .78Health Effectiveness Data and Information Set .79Medicare STAR Ratings .80Internal Care and Quality Improvement Audits .81Mock Audit Protocol .84SaChapter 4. CMS-HCC Alternative Payment Condition Count (APCC)Model Category V24 . 852021 CMS-HCC V24 Alternative Payment Condition Count (APCC) ModelDisease Coefficient Relative Factors and Hierarchies for ContinuingEnrollees Community and Institutional Beneficiaries with 2020Midyear Final ICD-10-CM Mapping .85CMS-HCC Alternative Payment Condition Count Model V24 —2021 Demographics . 5212021 Alternative Payment Condition Count Model Relative Factorsfor Continuing Enrollees . 521Medicaid and Originally Disabled Interactions . 521Disease Interactions . 522Disabled/Disease Interactions . 522Payment HCC Counts. 5232021 Alternative Payment Condition Count Model Relative Factorsfor Aged and Disabled New Enrollees . 5232021 Alternative Payment Condition Count Model Relative Factors for NewEnrollees in Chronic Condition Special Needs Plans (C-SNPs). 524ii2020 Optum360, LLC

IntroductionThe traditional fee-for-service payment model has been widely used since the 1930s whenhealth insurance plans initially gained popularity within the United States. In this paymentmodel, a provider or facility is compensated based on the services provided. This paymentmodel has proven to be very expensive. Closer attention is being paid to healthcare spendingversus outcomes and quality of care and this has been compared to the healthcare spendingof other nations. This has caused a need to develop a system to evaluate the care being given.In the 1970s, Medicare began demonstration projects that contracted with healthmaintenance organizations (HMO) to provide care for Medicare beneficiaries in exchange forprospective payments. In 1985, this project changed from demonstration status to a regularpart of the Medicare program, Medicare Part C. The Balanced Budget Act (BBA) of 1997named Medicare’s Part C managed care program Medicare Choice, and the MedicarePrescription Drug, Improvement and Modernization Act (MMA) of 2003 again renamed it toMedicare Advantage (MA).mpleMedicare is one of the world’s largest health insurance programs, and about one-third of thebeneficiaries on Medicare are enrolled in an MA private healthcare plan. Due to the greatvariance in the health status of Medicare beneficiaries, risk adjustment provides a means ofadequately compensating those plans with large numbers of seriously ill patients while notoverburdening other plans that have healthier individuals. MA plans have been using theHierarchical Condition Category (HCC) risk-adjustment model since 2004.The primary purpose of a risk-adjustment model is to predict (on average) the futurehealthcare costs for specific consortiums enrolled in MA health plans. The Centers forMedicare and Medicaid Services (CMS) is then able to provide capitation payments to theseprivate health plans. Capitation payments are an incentive for health plans to enroll not onlyhealthier individuals but those with chronic conditions or who are more seriously ill byremoving some of the financial burden.SaThe MA risk-adjustment model uses HCCs to assess the disease burden of its enrollees. HCCdiagnostic groupings were created after examining claims data so that enrollees with similardisease processes, and consequently similar healthcare expenditures, could be pooled into alarger data set in which an average expenditure rate could be determined. The medicalconditions included in HCC categories are those that were determined to most predictablyaffect the health status and healthcare costs of any individual.Section of 1343 of the Affordable Care Act (ACA) of 2010 provides for a risk-adjustmentprogram for non-Medicare Advantage plans that are available in online insurance exchangemarketplaces. Beginning in 2014, commercial insurances were able to potentially mitigateincreased costs for the insurance plan and increased premiums for higher-risk populations,such as those with chronic illnesses, by using a risk-adjustment model. The risk-adjustmentprogram developed for use by non-Medicare plans is maintained by the Department ofHealth and Human Services (HHS). This model also uses HCC diagnostic groupings; however,this set of HCCs differs from the CMS-HCCs to reflect the differences in the populations servedby each healthcare plan type.This publication will cover the following: History and purpose of risk-adjustment factor (RAF) Key terms definitions Acceptable provider types Payment methodology and timeline Coding and documentation2020 Optum360, LLC1

Chapter 1. Risk Adjustment BasicsThe need to track and report disease and causes of death was recognized in the 18th century.The various popular methodologies were compiled over the course of the First through FifthInternational Statistical Institute Conferences in the 20th century; during the SixthInternational Conference, the World Health Organization (WHO) was tasked with revising andmaintaining the classifications of disease and death. In the 1930s health insurance coveragegained popularity. Many labor groups and companies started offering this type of benefit totheir employees. In 1966, the American Medical Association (AMA) published the first editionof the Current Procedural Terminology (CPT ) to standardize the reporting of surgicalprocedures. This framework created the fee-for-service payment model, which is currentlyused.The fee-for-service model, however, does not account for acuity or morbidity of its patients. Amedically complex, chronically ill patient’s healthcare provider would receive the samereimbursement for the same procedure done on a healthy patient.mpleIn 1997, the Balanced Budget Act mandated that Medicare begin allowing participants tochoose between traditional Medicare and managed Medicare plans (now MedicareAdvantage), which would incorporate the risk-adjustment payment methodology no laterthan January 2000. Initially, these managed Medicare plans were paid a fixed dollar amountto care for Medicare members. In 2007, these MA plans were based 100 percent on riskadjustment. This better allocates resources to populations of medically needy patients.Risk adjustment allows the Centers for Medicare and Medicaid Services (CMS) to pay plans forthe risk of the beneficiaries they enroll, instead of an average amount for Medicarebeneficiaries. By risk adjusting plan payments, CMS is able to make appropriate and accuratepayments for enrollees with differences in expected costs. Risk adjustment is used to adjustbidding and payment based on the health status and demographic characteristics of anenrollee. Risk scores measure individual beneficiaries’ relative risk and are used to adjustpayments for each beneficiary’s expected expenditures. By risk adjusting plan bids, CMS isable to use standardized bids as base payments to plans.SaKey Terms Hierarchical condition categories (HCC). Groupings of clinically similar diagnoses ineach risk-adjustment model. Conditions are categorized hierarchically and the highestseverity takes precedence over other conditions in a hierarchy. Each HCC is assigned arelative factor that is used to produce risk scores for Medicare beneficiaries, based onthe data submitted in the data collection period. Medicare Advantage (MA) plan. Sometimes called “Part C” or “MA plans,” offered byprivate companies approved by Medicare. If a Medicare Advantage plan is selected bythe enrollee, the plan will provide all of Part A (hospital insurance) and Part B (medicalinsurance) coverage. Medicare Advantage plans may offer extra coverage, such asvision, hearing, dental, and/or health and wellness programs. Most include Medicareprescription drug coverage (Part D). Risk-adjustment factor (RAF). Risk score assigned to each beneficiary based on hisor her disease burden, as well as demographic factors. Sweeps. Submission deadline for risk adjustment data that occurs three timesannually: January, March, and September. Generally, claims continue to be acceptedfor two weeks after the deadline.2020 Optum360, LLC5

Risk Adjustment Coding and HCC GuideChapter 1. Risk Adjustment BasicsHCC Compared to MS-DRGFeature Payment groups HCCs (Medicare, non RX)79 HCCsMS-DRGs754 MS-DRGsICD-10-CM codesAll ICD-10-CM codes have thepotential to affect MS-DRGassignment. Some codes mayresult in an “ungroupable”MS-DRG.Just over 10,000 have RAFvalue.ICD-10-CM codes are used An ICD-10-CM code appears in Codes may be used in multiplein one payment group only only one HCC, with fewMS-DRGs.exceptions.ICD-10-PCS codesHCCs are not affected byICD-10-PCS procedure codes.Thousands of ICD-10-PCScodes, alone or in combination,can affect MS-DRG assignment.Only one MS-DRG is assignedfor each inpatient stay.Codes used in paymentMS-DRGs may include bothprocedures and diagnoses,both acute and chronicconditions.All HCCs are defined bydiagnosis codes, typicallychronic conditions.Reporting time frameHCCs are calculated over a year, MS-DRGs capture one inpatientusing scores from all providers encounter at a time and for onethat have treated the patient in single provider at a time.that time.Diagnostic codes reportedmust follow the codingconventions in the ICD-10-CMclassification and the TabularList and Alphabetic Index andthey must adhere to theICD-10-CM Official Guidelinesfor Coding and Reporting.Diagnostic codes reportedmust follow the codingconventions in the ICD-10-CMclassification and the TabularList and Alphabetic Index andthey must adhere to theICD-10-CM Official Guidelinesfor Coding and Reporting.Chronic diseases treated on anongoing basis may be codedand reported as many times asthe patient receivestreatment/care for thecondition(s).Sequencing of Principal andSecondary diagnoses applies,and must meet the UniformHospital Discharge Data Set(UHDDS) definitions ofPrincipal and Other Diagnoses.SaValidationAge, sex, discharge status.mplDemographic factors used Age, sex, institutional status,in paymentdisability, dual eligibility forMedicare and Medicaid.ePayment group assignment An individual may have morethan one HCC assigned.No sequencing is involved, andcodes may be assigned for allproperly documentedconditions that coexist at thetime of the encounter/visit, andrequire or affect patient care,treatment, or management.Some organizations usemnemonics such as MEAT(Monitor, Evaluate, Assess,Treatment) to assist withidentifying reportableconditions.2020 Optum360, LLC11

Chapter 2. Coding and DocumentationRisk Adjustment Coding and HCC Guide Hospital outpatient facilitiesType of Hospital Outpatient FacilityShort-term (general and specialty) hospitalsMedical assistance facilities/critical access hospitalsCommunity mental health centersFederally qualified health centers/religious nonmedical healthcare institutions*1Long-term hospitalsRehabilitation hospitalsChildren’s hospitalsRural health clinics, freestanding and provider-based*2Psychiatric hospitals* Facilities use a composite bill that covers both the physician and the facility component of the servicesrendered in these facilities that do not result in an independent physician claim.e1 Community mental health centers (CMHC) provide outpatient services, including specializedoutpatient services for children, the elderly, individuals who are chronically ill, and residents of theCMHC’s mental health services area who have been discharged from an inpatient treatment facility.mpl2 Federally qualified health centers (FQHC) are facilities located in a medically underserved area thatprovide Medicare beneficiaries with preventative primary medical care under the direction of aphysician. PhysiciansCodeSpecialtyCodeSpecialty1General l surgery27**Geriatric psychiatry tal surgery 72*Pain management4Otolaryngology29Pulmonary disease 76*Peripheral vasculardiseaseSaCode Specialty5Anesthesiology33*Thoracic surgery77Vascular surgery6Cardiology34Urology78Cardiac surgery7Dermatology35Chiropractic79Addiction medicine8Family practice36Nuclear medicine80Licensed clinicalsocial worker9**Interventional painmanagement (IPM)37Pediatric medicine 81Critical care(intensivists)10Gastroenterology38Geriatric medicine 82Hematology11Internal thic40manipulative therapyHand 5Maxillofacialsurgery14Neurosurgery42Certified nursemidwife86Neuropsychiatry* Indicates that a number has been skipped.** Added effective January 1, 2010, dates of service.202020 Optum360, LLC

Risk Adjustment Coding and HCC GuideChapter 2. Coding and Documentationdisease. These conditions are generally managed by ongoing medication and have thepotential for acute exacerbations if not treated properly, particularly if the patient isexperiencing other acute conditions. It is likely that these diagnoses would be part of ageneral overview of the patient’s health when treating co-existing conditions for all but themost minor of medical encounters. Co-existing conditions also include ongoing conditionssuch as multiple sclerosis, hemiplegia, rheumatoid arthritis, and Parkinson’s disease.Although they may not impact every minor healthcare episode, it is likely that patientshaving these conditions would have their general health status evaluated within a datareporting period, and these diagnoses would be documented and reportable at that time.”Another type of co-existing condition is “symptoms.” Symptoms that are integral to anunderlying condition should not be coded.mpleWith chronic or ongoing conditions, CMS acknowledges that there is a common error or issuewith the use of “history of.” The use of “history of” means the patient no longer has thecondition and the diagnosis often indexes to an ICD-10-CM “Z” code, which does not map toan HCC category in most models. The documenting provider may designate a currentcondition as historical or designate a resolved condition as still active. It is important tocarefully review all parts of the note for additional information about conditions that mayaffect care during the encounter. Conditions documented in any portion of the medicalrecord should be evaluated and reported as appropriate. This includes conditionsdocumented in the history of present illness or past history, if the condition is still current;exam, problem lists such as current, on-going, or active; the review of systems; andassessment and plan portions.On-going Chronic ConditionsWithin the 2008 Risk Adjustment Data Technical Assistance for Medicare AdvantageOrganizations Participant Guide, CMS acknowledges that there are certain chronic conditionsthat are not expected to resolve and will continue to require medical management as well asimpact future care, even for minor encounters or encounters for an unrelated issue. Theseconditions include: Congestive heart failure Chronic obstructive pulmonary diseaseSa Chronic hepatitis B Atherosclerosis of aorta Atherosclerosis of the extremities Psychiatric codes, even single episode (use remission identifier) Alcohol and drug dependency (even in remission) Diabetes Parkinson’s disease Lupus (SLE) Rheumatoid arthritis (RA) Amputation status Functional artificial openings HIV/AIDS2020 Optum360, LLC27

Chapter 3. Audits and QualityImprovementA chart audit is a detailed review of the medical record to determine if the services renderedmatch the services reported. In risk adjustment, this is ensuring that conditions reported aresupported by valid medical records. Most often, audits are performed to ensure accuracy andcompliance; however, quality improvement measure audits are increasingly popular.It is advisable to regularly audit the documentation being used as well as the coding for riskadjustment to ensure compliance.Step 1eDetermine who will perform the audit. An internal audit is typically performed by codingstaff within the practice that are proficient in coding and interpreting payer guidelines.Depending upon the size of the practice and the number of services provided annually, acompliance department with full-time auditors may be established. If not, the personperforming the audit should not audit claims that he or she coded.Step 2Step 3mplDefine the scope of the audit. Determine what types of services to include in the review. Usethe most recent Office of Inspector General (OIG) Work Plan, recovery audit contractor (RAC)issues, and third-party payer provider bulletins, which will help identify areas that can betargeted for upcoming audits. Review the OIG Work Plan, which is now a web-based workplan updated monthly rather than yearly, to determine if there are issues of concern thatapply to the practice. Determine specific coding issues or claim denials that are experiencedby the practice. The frequency of coding or claims issues and potential effect onreimbursement or potential risk can help prioritize which areas should be reviewed. Servicesthat are frequently performed or have complex coding and billing issues should also bereviewed, as the potential for mistakes or impact to revenue could be substantial.SaDetermine the type of audit to be performed and the areas to be reviewed. Once the area ofreview is identified, careful consideration should be given to the type of audit performed.Reviews can be prospective or retrospective. If a service is new to the practice, or if codingand billing guidelines have recently been revised, it may be advisable to create a policystating that a prospective review is performed on a specified number of claims as part of acompliance plan. The audit should include ensuring the medical record coded meetsadministrative requirements, such as patient name and date of service are on the record,accuracy of diagnosis codes, compliance of any queries generated, and whether the sourcedocument supports code assignment.Step 4Assemble reference materials. Reference materials, such as current editions of codingmanuals and Centers for Medicare and Medicaid Services (CMS) or other third-party policiespertinent to the services being reviewed, should be collected.Step 5Develop customized data capture tools. Use an audit worksheet, see example on page 83.Audit worksheets can aid in the audit process. They help verify that signatures were obtainedand that patient identifying information (e.g., complete name, date of birth) is correct.Step 6Develop a reporting mechanism for findings. Once the audit is complete, writtenrecommendations should be made. The recommendations can include conducting a morefrequent focused audit, implementing improved documentation templates, or conductingtargeted education on ICD-10-CM coding. Each practice should have benchmarks set up that2020 Optum360, LLC53

ledRisk Adjustment Coding and HCC GuideCMS-HCCHierarchiesHCCDescriptionCMS-HCC ModelCategory V24DescriptionDiagnosisCodeChapter 4. CMS-HCC Alternative Payment Condition Count (APCC) Model Category V24Malignant neoplasm of upper lobe,unspecified bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.11Malignant neoplasm of upper lobe,right bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.12Malignant neoplasm of upper lobe,left bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.2Malignant neoplasm of middlelobe, bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.30Malignant neoplasm of lower lobe,unspecified bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.31Malignant neoplasm of lower lobe,right bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.32Malignant neoplasm of lower lobe,left bronchus or lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.80Malignant neoplasm of overlappingsites of unspecified bronchus andlung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.623C34.81Malignant neoplasm of overlappingsites of right bronchus and lung9Lung and Other Severe Cancers10, 11, 12 1.0240.9101.0101.0011.0010.8800.62

Risk Adjustment Coding and HCC Guide Chapter 1. Risk Adjustment Basics 2020 Optum360, LLC 11 HCC Compared

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