Risk Adjustment

Policy Number: GP-P-003

Last Updated: Jan. 1, 2022 

Risk adjustment is a payment methodology that uses ICD-10-CM codes, organized into Hierarchical Condition Categories (HCCs), to establish a risk score for each patient. It is important to capture the overall health status of a patient through accurate documentation and coding, which assists in prediction of health care costs and the development of chronic care programs. 

A major component of the HCC model is that the individual HCCs are only valid for one year; on Jan. 1, the patient’s HCC listing is blank. This requirement encourages each patient to be seen by their primary care provider (PCP) at least once per year to establish and follow traditional managed care concepts such as continuity of care, disease management and case management. 

As part of the contract, providers will prioritize and strive to accurately capture the health condition of a patient to support quality patient care. This entails addressing the patient’s condition, documenting in the medical record information to support the accurate health status of a patient. 

Coding accuracy is key; each provider should assign ICD-10 codes to the highest level of specificity based upon the current condition of the patient.  

Chronic conditions treated on an ongoing basis may be coded and reported as many times as the patient receives treatment and care for the condition. The ICD-10-CM Official Guidelines for Coding and Reporting state it is appropriate to report all current co-existing conditions that affect the care and management of a patient.  

In addition to facilitating high-quality patient care, a properly documented medical record verifies and documents precisely what services were provided for specific diagnoses and chronic conditions. 

Providers must ensure their documentation complies with HCC reporting requirements and demonstrate conditions are monitored, evaluated, treated and assessed during face-to-face encounters.  

Specificity of the clinical documentation is critical because risk adjustment coding professionals must be able to determine if a condition is current and active.  

Examples of provider documentation best practices include:

  • Documenting all cause-and-effect relationships 
  • Clearly link complications or manifestations of a disease process 
  • All conditions that receive care and management during the encounter should be reported and included as part of the current medical decision-making process, document each condition in the encounter for every visit. 
  • Document diagnoses as “history of” or “past medical history (PMH)” when the condition no longer exists and is considered resolved. 

By working together, the health plan and provider organization can ensure compliance and optimal financial results under the HCC risk-adjustment models.