Diagnosis Coding For Risk Adjustment – Are You Ready (AAFP)

The AAFP is a great first-stop for information on Risk Adjustment and HCC Diagnosis Coding. Although this article is a few years old (2018), its take on HCC Diagnosis Coding for Risk Adjustment is both unique and extremely helpful.

First, they lay out what it is and how it works. Then they tie it in with ICD-10 codes and HCC coding, to paint—with a broad brush—the complete picture of what a practice will need to know, do, and master to step into a risk-adjustment payment model.

 

 

KEY POINTS

 

1. Mapping ICD-10 codes to Hierarchical Condition Category (HCC) codes determines the severity of illness.
2. Risk-adjustment factors play a significant role in new payment models.
3. Physicians should report any diagnosis codes associated with chronic conditions that affect treatment choices, not just the diagnosis codes that describe why a patient came in .
4. Physicians should comprehensively code chronic conditions at annual visits, as RAF (patient risk) scores reset every year.

 

 

➡️ These fundamentals are just as proper today as in 2018, but with the release of CMS’s updated HCC v28 model, coding accuracy and documentation carry even more weight. Missing a diagnosis not only lowers payment but may also increase audit exposure.

 

HOW RISK ADJUSTMENT WORKS

First it may be helpful to briefly review the connection between coding, risk adjustment, and payment. Risk-adjustment models assign each patient a risk score based on demographics and health status. Demographic variables may include age, gender, dual Medicare/Medicaid eligibility, whether the patient lives at home or in an institution, and whether the patient has end-stage renal disease. Health status is based on the diagnosis codes submitted on inpatient, outpatient, and professional claims in a calendar year. “Specific diagnosis codes map to disease groups (HCCs). Demographics and HCCs are weighted and used to calculate a risk-adjustment factor (RAF) score.” – AAFP

 

The author then compiled a series of examples of HCC coding options, and guided the determination of which codes to use. See the complete list examples here.

Today, with CMS’s accelerated audits and the introduction of v28, the stakes are higher. Practices that fail to capture the full clinical picture risk leaving revenue on the table and drawing unwanted scrutiny for compliance.

 

COMMON CONDITIONS AND HOW TO CODE THEM

Family physicians can increase the accuracy of risk-adjustment scoring by focusing on capturing diagnosis codes for conditions they frequently encounter. Electronic health record (EHR) systems can help by identifying diagnosis codes that carry an HCC weight, but most do not. A related article in this issue includes a reference tool that physicians can use to keep HCC codes and RAF scoring in mind when selecting diagnosis codes.

Read the full article here.

 

1. What is the connection between ICD-10 codes and HCC coding in risk adjustment?

ICD-10 diagnosis codes are mapped to Hierarchical Condition Categories (HCCs), which group conditions by severity and predict future healthcare costs. This mapping drives the risk-adjustment score used in value-based payment models. Accurate coding ensures that chronic and complex conditions are correctly captured and reimbursed.

2. How do RAF (Risk Adjustment Factor) scores affect physician reimbursement each year?

RAF scores reflect a patient’s overall health risk based on demographics and documented diagnoses. These scores reset annually, meaning physicians must recapture every chronic condition each year. Higher RAF scores lead to higher reimbursement for caring for medically complex patients.

3. Why should physicians code all chronic conditions during annual visits?

Coding all chronic conditions at least once a year ensures accurate risk scoring and prevents underestimation of patient complexity. If conditions are missed, the practice may lose legitimate reimbursement and risk inadequate resources for patient care.

4. What role do demographics and diagnosis coding play in risk-adjustment payment models?

Risk-adjustment models calculate payments by combining patient demographics (such as age, gender, Medicaid eligibility, and living situation) with HCC-coded diagnoses. Together, these variables determine a patient’s risk profile and the payment level health plans receive to manage their care.

5. Which common chronic conditions should family physicians code for accurate HCC risk adjustment?

Common conditions that significantly impact risk scores include diabetes with complications, chronic kidney disease, COPD, depression, and heart failure. Consistently capturing these diagnoses ensures accurate HCC coding, better RAF scoring, and fair compensation for managing complex patients.