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How Is HCC Coding Used in Value-Based Care Programs?

August 16, 2022

Value-based care is a healthcare delivery model where providers, such as hospitals, physicians, nurses, and even support staff, are paid based on patient health outcomes. Under this healthcare delivery model, these providers earn rewards for helping patients improve their health, lessen the effects and incidence of chronic diseases, and live healthier lives in an evidence-based way. In simpler terms, the better patients respond to the level of care they receive from providers, the better the compensation is for those providers. 

What Is HCC Coding and How Does It Benefit Providers of Oncology?

Having discussed value-based care and what it means for patients and providers, it’s essential to understand how HCC coding fits into this equation, especially as it relates to oncology. According to a study published by the National Cancer Institute in 2020, an estimated 1.8 million Americans were diagnosed with cancer. The study found that a majority of those cancer diagnoses consisted of the following:

    • Breast cancer
    • Lung and bronchus cancer
    • Prostate cancer
    • Colon and rectum cancer
    • Melanoma of the skin
    • Bladder cancer
    • Non-Hodgkin lymphoma
    • Kidney and renal pelvis cancer
    • Endometrial cancer
    • Leukemia
    • Pancreatic cancer
    • Thyroid cancer
    • Liver cancer

These commonly diagnosed cancers are difficult to treat, and the cost associated with those treatments are often extraordinarily high. According to a joint study conducted by the National Institutes of Health (NIH) and the National Cancer Institute in 2020, the national costs for cancer care in the U.S. was more than $208 billion. Hierarchical condition category (HCC) coding, when part of a value-based care program, can help drive those costs down while simultaneously giving patients the best chance of beating cancer.

How Are HCC Codes Used to Calculate Treatment Costs for Patients?

HCC is a risk-adjustment healthcare delivery model that helps estimate a patient’s future healthcare cost. HCC, coupled with ICD-10-CM codes, also known as the International Classification of Diseases, Tenth Revision Clinical Modification codes, helps hospitals, physicians, nurses, and other healthcare providers classify and code all diagnoses, symptoms, and procedures related to a patient’s care. These codes, alongside patient-specific demographics, such as age and gender, inform what’s known as a risk adjustment factor (RAF).

How Does This Provide the Framework for Reimbursement in Value-Based Programs?

Risk adjustment factor scores play a critical role in value-based programs since they help reflect how capable a given practice is at meeting established cost and quality metrics. When risk adjustment factor scores and patient care are out of sync, health insurance providers are inclined to believe patients had higher treatment costs or lower quality outcomes than expected. 

Often, this results in a health practice or individual provider failing to meet quality and cost performance metrics and missing out on the opportunity for shared savings when filing a claim with the patient’s insurance provider. To mitigate this risk, providers often outsource HCC medical coding services to third-party companies that can better communicate patient complexities to their respective health insurance providers before they initiate a claim.

What Are Some Common Misconceptions Associated With HCC Coding Guidelines?

HCC coding guidelines aren’t the easiest to understand, resulting in various misconceptions. Some of the most common misconceptions associated with these guidelines include the following:

HCC coding increases reimbursement rates – Meeting guidelines for HCC doesn’t change the reimbursement for a physician or any other prescriber. However, not meeting them can spell missed opportunities insofar as enjoying shared savings in a value-based care program.

Documenting comorbidities is not required – For accurate HCC billing, providers must document all comorbidities. This is especially true if they influence cancer patients’ outcomes.

HCC billing can trigger a recovery audit contractor (RAC) audit – Some providers believe HCC billing could lead to a RAC audit. HCC codes, unlike current procedural terminology (CPT) codes, don’t change a provider’s reimbursement rates. 

HCC Coding Improves the Patient Experience and Ensures Accurate Reimbursement 

HCC coding helps to communicate patient complexity and paints a whole picture of the patient. It also predicts future patient financial resources and ensures providers receive fair and accurate reimbursement.

Few understand this unique healthcare delivery model better than a premier oncology practice management company. At Verdi Oncology, we partner with forward-thinking physicians, practices, and hospitals to support the growth of highly specialized community-based oncology practices. Contact us to learn more about joining our network.