Risk Coding for Medical Practices and Outpatient Services

This article discusses the dos and don’ts of assigning diagnosis codes in medical practices for risk adjustment, using the HCC system.

• Watch our on-demand webinar HCC Coding for Medical Practices for additional details.

What is risk adjusted diagnosis coding and why is it used?

Risk adjustment was developed to predict future costs for a group of beneficiaries or subscribers. Now, it is used to normalize cost, quality and outcome for different groups of patients. Accurately assigning diagnosis codes to an individual patient and to a panel of patients communicates the acuity of the patient population being treated.

What are HCCs

Hierarchical Condition Categories (HCCs) were developed by Medicare to pay Medicare Advantage Organizations a monthly fee, based on the disease burden of their patients. HCCs are now used by some Accountable Care Organizations and private payers as one metric in determining future payments.

ICD-10-CM guidelines

When assigning diagnosis codes in physician practices and outpatient departments for HCC coding, use Section I, Conventions, official coding guidelines and chapter specific guidelines and Section IV, Diagnostic Coding and Reporting Guidelines for Outpatient Services” from the official guidelines. The rules in sections II and III relate to non-outpatient settings.   Section II, “Selection of Principal Diagnosis” and Section III, “Reporting Additional Diagnoses” are for facility coding. Instructions related to the Uniform Hospital Discharge Data Set (UHDDS) do not apply to outpatient services and medical practices. According to the ICD-10-CM Official Guidelines, “Since that time, the application of the UHDDS definitions has been expanded to include all non-outpatient settings (acute care, short term, long term care and psychiatric hospitals; home health agencies; rehab facilities; nursing homes, etc.). The UHDDS definitions also apply to hospice services (all levels of care).”[1]  Guidance related to principal diagnosis and discharges in Section II and III do not apply to coding for medical practice outpatient services.

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