promotes Hierarchical Condition Category HCC Risk Adjustment Coding promotes Hierarchical Condition Category HCC Risk Adjustment Coding

Hierarchical Condition Category (HCC) risk adjustment coding is a way to try to estimate a patient’s future health care costs. HCC takes several factors into account. The goal is to estimate what types of health problems a patient may experience in the future as well as the costs for any related treatment. It is what is known as a risk adjustment model, which can be determined using healthcare software.

Risk Adjustment Models

Risk adjustment models are ways that health insurance companies help offset higher healthcare costs for individuals. They are a way to make sure that higher-risk individuals can still get healthcare coverage. Before the use of risk adjustment models, it was common for insurers to deny insurance coverage for higher-risk individuals. Even when high-risk individuals were offered insurance, the policies often had exclusions for pre-existing conditions, which often rendered the coverage useless for the patients. However, with risk adjustment models, insurance companies get a financial incentive to cover high-risk people because they receive compensation when covering those high-risk individuals.

Risk Adjustment and the Affordable Care Act

The Affordable Care Act incorporates a risk adjustment model. The purpose of it is to ensure insurers who cover more high-risk individuals do not have to shoulder an unfair portion of the risk burden. It does this by requiring insurers with a greater proportion of healthy individuals to fund payments for insurers who cover a greater proportion of high-risk individuals.

How Risk Adjustment Models Work

Risk adjustment models use demographic information to determine a patient’s risk score. The risk score is a way of trying to condense the patient’s future risk. The demographic factors like age and sex are ways to approximate general risk. For example, younger individuals are usually lower risk than older individuals. However, most models also look at other factors, specifically personal and family health history, to get a more accurate model of an individual’s future health risks.

How Does HCC Work?

According to, HCC depends upon using coding to assign risk scores to patients. It uses ICD-10 coding, which maps each of the HCC factors to part of the ICD-10 code. Patients may have multiple healthcare risks at the same time, which can make predicting future healthcare costs more difficult. Not all risks are assigned the same score, but the software has algorithms that can assign a weight to the different factors to help predict future costs. Accurate prediction of these future costs is important when determining whether a patient is high-risk. Places like Foresee Medical have software designed to help insurers make sure they capture all appropriate HCC codes so they can be reimbursed for high-risk patients. For more information, click here.

New Developments

In 2018, the Centers for Medicare and Medicaid Services released a memo titled ACA Round-Up: Risk Adjustment, Exchange Blueprint, SHOP, And New Memo. This memo details the proposed changes in payment rules. One of the areas that may be impacted is risk-sharing for state-based exchanges where some insurers cover greater numbers of high-risk patients than other insurers.

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