Coding for Risk Adjustments: What is it and how can your practice tackle it?

Date: April 26th, 2019Category: CORHIO e-NewsletterTopics: risk management, Hierarchical Condition Category Coding


San Luis Valley Health and CORHIO are working together to improve the clinic’s coding to set them up for more successful payment model participation. Learn more about coding for risk adjustments and how one practice is tackling it.

According to the American Academy of Family Physicians, Hierarchical Condition Category (HCC) coding is a risk-adjustment model originally designed to estimate future health care costs for patients. The Centers for Medicare & Medicaid Services (CMS) HCC model was initiated in 2004, but is becoming increasingly prevalent as the environment shifts to value-based payment models.

Payers use HCC codes, along with demographic factors such as age and gender to assign patients a risk adjustment factor (RAF) score. Using algorithms, a patient’s RAF score can be calculated and used to predict costs. So a patient with multiple chronic conditions would have a higher RAF score and be expected to have higher health care costs.

Hierarchical condition category is based on ICD-10 coding to assign risk scores to patients. There are 79 HCC categories and of the approximately 70,000 ICD-10 codes, 9,500 map to those categories.

The most common HCC codes:

  • Diabetes
  • Congestive Heart Failure
  • Ischemic Heart Disease
  • COPD
  • Cancer
  • Alzheimer's Disease
  • Obesity


So why should a practice do this?

Many growing payment models are underscoring the importance of risk adjustment and offering compensation for practices able to make up for the extra costs associated with high-risk enrollees.

Risk factors serve to scale payments to be reflective of the risks associated with the patient. For example, CMS uses the HCCs to risk-adjust the payments it makes to Medicare Advantage (MA) plans and for care provided via some demonstration.

For those in MIPS, risk adjustment could positively impact your overall cost measure score. The cost category will be worth 30 points of your final MIPS score by the program year 2021. With the cost measures becoming increasingly important, it is also important to understand how risk score impacts these cost scores. All cost measures are risk adjusted to be able to take into account that a more complex patient will cost more overall and per episode than an average or low risk patient. With these risk adjustments, a lower cost facility with also lower risk patients may risk adjust to become more costly than a higher cost facility that also treats more complex patients.  

CMS also acknowledges that treating higher risk patients can impact your overall score and have created a “complex patient bonus.” This bonus will add up to 5 points to your final MIPS score which is to be proportional to the level of clinical complexity and risk of clinicians’ patient population.

Where to begin?

San Luis Valley Health has been working with CORHIO’s Lauren O’Kipney, Transformation Manager, on some staff training and a deep dive into HCC coding. Breaking down the training into parts and starting with primary care clinic clinicians, coding and billing staff, as well as upper management has worked well for them. The next phase will be to expand the training to specialty care clinicians.

“With this practice, I did 101 training and 201 training with them, which means we started out level setting the staff about what HCC coding is and means for them,” says O’Kipney. “Then we dove deeper into chart auditing and looking at specific examples of what could be improved. We reviewed a Top HCC Codes Sheet so they could have an easy reference to consult when charting.”

Lauren’s approach with practices involves the “MEAT” Method of HCC Coding Documentation:

  • Monitor: signs, symptoms, disease progression/regression
  • Evaluation: test results, medication effectiveness, response to treatment
  • Assessment: ordering tests, discussion, review of record, counseling
  • Treatment: medications, therapies, other modalities

“I look for ways practices can improve their HCC coding by reviewing actual patient charts. I look for previously treated conditions that should not be coded as current, problems from the patient’s problem list not being correctly documented, patient history codes that should be coded annually when pertinent to patient care, among other things,” says O’Kipney.

“Our providers have nothing but good things to say about Lauren’s training. They tell me they can’t document what they don’t know – they are not coders – so providing the top codes to use in the problem list was really helpful for them,” says Crystal Kechter, EHR Project Support Manager, San Luis Valley Health. “Our providers are seeing complex patients but their documentation does not always reflect that. This training really showed us how we can improve our documentation by using the MEAT method.”

“I thought the training was excellent – it’s very helpful to know how to code more specifically,” says Dr. Melissa Voutsalath, San Luis Valley Health. “The handout is very helpful to refer to.”

For more information about CORHIO’s Transformation Support Services Team, please visit our website or contact us at