Medicare Advantage Hierarchical Condition Categories: Updated study results

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By Corey Nathan Berger, Eric P. Goetsch | 31 October 2012

With the implementation of the Patient Protection and Affordable Care Act (ACA) for Medicare Advantage (MA) plans entering its second year in 2013 and the resulting impact on payment rates from both the fee-for-service (FFS) phase-in and changes in star ratings, the pressure on MA plans to ensure that their risk scores appropriately reflect the health status of their population continues to increase.

The Centers for Medicare & Medicaid Services (CMS) assigns a risk score to every MA member based on the member’s characteristics, including age, gender, disability status, Medicaid status, and “health” status. The majority of revenue received by MA plans is based on the risk scores of their members, and the health status is the primary variable in the calculation of the risk score.

CMS determines the diseases/HCCs each member has based on ICD-9 diagnosis codes. Identifying and submitting all appropriate ICD-9 diagnosis codes to CMS results in a higher risk score for the member and an increased payment to the MA plan. This article discusses accurate diagnostic coding as an important revenue tool.

This article, first published in the October 2012 issue of the Society of Actuaries' Health Watch newsletter, discusses accurate diagnostic coding as an important revenue tool.