medicare advantage hccMedicare Advantage, an alternative to traditional Medicare, covers 13 million beneficiaries, or 27 percent of the people in the federal health-care program for the elderly.

It can be a profitable part of your practice income—but do you know how to optimize payment?

Coding correctly for Medicare Advantage (MA) patients can mean an increase in payment of 2-3 times the base amount, but it’s time consuming—and very challenging—to learn and understand all the coding requirements.

Let’s take a look at what’s involved and what you can do to optimize payment.

Many variables influence the rate paid by CMS to an MA plan, even for the same patients within a specific geographic area; one of the most important is the Hierarchical Condition Category (HCC) system.

HCC is a payment methodology based on “risk” used by CMS to adjust MA health plan payments at the patient level. This means that 2 patients within the same community can have a different payment rate based on several factors relating primarily to the amount of risk—or work—it takes to maintain the health of a patient.

Risk adjustment allows CMS to pay plans for the risk of the beneficiaries they enroll, instead of an average amount for Medicare beneficiaries, according to CMS guidance on the subject. By risk adjusting plan payments, CMS says it is able to make appropriate and accurate payments for enrollees with differences in expected costs.

Risk scores measure individual beneficiaries’ relative risk, and risk scores are used to adjust payments for each beneficiary’s expected expenditures.

Several factors impact the risk score, but primarily the HCC risk adjustment is based on the enrollee health status and their demographic characteristics. The combination of the health status + demographics characteristics determine the patient’s Raw Risk Score.

Raw Risk Score = Patient Demographic Score + Health Status

Since the physician cannot influence the age and sex of the patient, the real impact that a physician can have on the Raw Risk Score (and therefore on payment) is the accurate documentation of the patient’s Health Status by billing the proper ICD codes.

Health Status is determined based on the following methodology:

  1. Physicians use diagnosis codes to document health status
  2. In a one-to-many relationship, around 3000 – 4000 ICD-9 codes relate to dozens of HCC Model Categories
  3. Each HCC Model Category relates to a “Relative Factor” or Health Risk Score

Example: The patient has Uncomplicated Diabetes Type 1

ICD Code Description HCC Model Category Health Risk Score
25001 DM I w/o complications 19 0.121

Health Risk Scores like the one shown above are used to adjust MA payments. A change in the risk score can significantly affect the total payment you receive as part of this program.

Medicare Advantage providers whose payment is tied to the amount of money the plan receives for a specific patient have a vested interest, along with the health plan, in documenting the proper ICD codes for each patient. If patients are coded properly, more dollars flow from CMS to the health plan and those dollars eventually trickle down to your practice.

MediTouch is Designed to Optimize Medicare Advantage Payment

MediTouch is the only EHR with our unique Risk Assessment tool that helps ensure you are getting paid fairly for your Medicare Advantage patients. The Risk Assessment tool helps you ensure that you are coding correctly to optimize your Medicare Advantage billing.

Find out more today about how HCC impacts Medicare Advantage payments, including explanations of code exclusions and codes that are “trumped” by other codes. Get your free copy of our white paper, The Medicare Advantage HCC Program: How to Optimize Your Coding.


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