Providers Are Leaving Money on the Table – Proper HCC Coding Fixes It

December 1, 2016 Phil C. Solomon

dime-picThe Centers for Medicare and Medicaid Service’s (CMS) Hierarchical Condition Category (HCC) risk adjustment model calculates risk scores, which will adjust capitated payments made for aged and disabled beneficiaries enrolled in Medicare Advantage (MA) and other plans.

The CMS-HCC model design uses two risk segments with separate coefficients to reflect the cost patterns of beneficiaries.  The community model represents those who live in the community less than 90 days as opposed to an institution.  Beneficiaries residing in an institution for 90 days or more fall into the long-term care category, which incurs an additional risk adjustment.  By design, both models predict healthcare costs for beneficiaries.

The CMS-HCC risk adjustment model looks at prospective data to predetermine the cost for the next year.  CMS pays a per-member per-month fee to the payer based on the prospective years risk scores.  Providers must identify all chronic conditions and/or severe diagnoses their patients have in a given year to substantiate a “base year” health profile for each patient that predicts costs in the following year.

The Path to Gaining Incremental Revenue

Few providers have the resources and are proficient enough in risk adjustment modeling to mitigate all of the compliance risks that they face.  This creates a problem for providers because there are significant dollars at risk for their enterprises.  In order to reduce risks, providers either hire expert HCC auditors as an internal resource or look to outside firms who are experts at executing risk adjustment and HCC auditing.  Many companies are capable of providing this service however; the best practice approach is to work with a company who can guide provider’s to keep up with CMS’s requirements for compliance while monitoring healthcare outcomes.

The following is an example of a provider leaving money on the table.

Risk Adjusted HCC Case Example

HPI: 86-year-old diabetic female patient presents to the office complaining of weakness. Patient also has COPD and CHF, which are managed by Dr. Smith. Patient is accompanied by daughter. She states that patient complained last night of weakness, shortness of breath and this morning she seems confused and decided to bring her in to be seen. PE: General: patient in distress appears weak Chest: clear, no wheezes, rales or rhonchi Cardio: no murmurs, rubs, click or gallop


  • Diabetes, Type 2, with ketosis, BS 425mg/dl, patient is being transported to ER for further evaluation possible admission
  • COPD, stable, continue current meds
  • CHF, Dr. Smith will be notified of patient’s condition and possible admission

Electronically signed by John Doe, MD 1/1/2001

Factors Scenario Coding 1(Less specific coding) Scenario Coding 2 (More Specific Coding)
Age/Sex 0.677 0.677
Medicaid 0.151 0.151
HCC-19- Diabetes (DM) 0.118
HCC 17- DM with acute complications 0.368
HCC 85 Congestive Heart Failure (CHF)   0.368
HCC 111 Chronic obstructive pulmonary Disease (COPD) .0346 0.346
DM + CHF Interaction   0.182
CHF+ COPD Interaction   0.259
Risk Score 1.292 2.351
Bid Rate (approx.) $753.69 $753.69
100% Risk Premium $973.77 $1,771.93

Scenario 1- Incomplete and not specific with Diabetes, Did not code Congestive Heart Failure which would take away both interactions with CHF w/ DM and COPDScenario 2- More complete accurate status profile

Increase the Bottom Line

It is important to maximize revenue and increase the bottom line.  HCCs are one area that can have an immediate positive financial impact for a provider.  I recommend you look into HCC coding to be sure you are being reimbursed accurately.  If you have questions, I can be reached at or at 404-849-8065.


Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at

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