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Tips for Coding Under Risk Adjustment Models

By Deborah Marsh, JD, MA, CPC, CHONC

Risk adjustment is part of the move from fee-for-service payment to value-based payment for health care services. A basic concept behind risk adjustment payment models is that health status affects health care costs and quality. In other words, the sickest patients typically cost the most to treat and they may have worse outcomes than healthier patients for reasons outside of the provider’s control. ICD-10-CM codes, which represent a patient’s diagnoses, provide data about health status and, therefore, the expected outcomes and costs of care.

Below you’ll find pointers for proper ICD-10-CM coding, including examples with diagnoses that may affect payment under risk adjustment models.

Why it matters: In a risk adjustment model, a patient gets a risk score based on demographics, such as age and gender, as well as health status. Using the Hierarchical Condition Categories (HCCs) from the Centers for Medicare & Medicaid Services as an example, certain diagnosis codes on medical claims map to HCCs, identifying the severity of illness to assist with calculating risk. One aspect of risk adjustment is transferring funds from plans with lower-risk patients to plans that have a higher number of sicker-than-average patients, removing the incentive to insure only lower-risk patients. But risk adjustment also has a role in determining payments to facilities and, increasingly, to physicians. Payers may use the overall annual risk score from a group to calculate future contracted rates.

1. Code for all conditions that affect treatment choices. Risk adjustment models depend on knowing the patient’s health status, so watch for chances to report relevant status codes and chronic condition codes. Providing adequate data about the patient’s overall health and the conditions that affect medical decisions will help ensure more accurate future payments.

The following are examples of status codes that crosswalk to HCCs:

• Z21 (Asymptomatic HIV infection status);
• Z68.41–Z68.45 (Body mass index [BMI] 40 or greater, adult);
• Z79.4 (Long term (current) use of insulin);
• Z89.411-Z89.449 (Acquired absence of toe(s), foot, and ankle);
• Z93.0–Z93.9 (Artificial opening status);
• Z94.0 (Kidney transplant status);
• Z99.11 (Dependence on respirator [ventilator] status); and
• Z99.2 (Dependence on renal dialysis).

Chronic conditions cover a wide spectrum. Some of the more common possibilities, all of which map to HCCs, include the following:

• C50.- (Malignant neoplasm of breast);
• E11.9 (Type 2 diabetes mellitus without complications);
• F10.120 (Alcohol abuse with intoxication, uncomplicated); and
• I48.11 (Longstanding persistent atrial fibrillation).

If you perform annual exams, then that’s a good time to report these status and chronic condition ICD-10-CM codes. That way you ensure you’ve captured them for the year so the payer includes them in the annually calculated risk score.

These codes are relevant to claims for problem-specific encounters as well. For instance, a physician may have to consider a patient’s morbid obesity, artificial opening status, diabetes, or heart disease when deciding between different treatment options. The physician should document that aspect of medical decision making so the medical coder can capture the appropriate codes and better demonstrate the patient’s health status.

To help with this diagnosis coding, remember the acronym MEAT: Report only what the provider has monitored, evaluated, assessed, or treated during the reporting year.

2. Don’t miss opportunities to report complications. Just as you shouldn’t ignore status and chronic condition codes, you also don’t want to overlook reporting complications. For conditions such as diabetes, the HCCs may differ for a “without complications” code and a “with complications” code. That means that you could be missing the chance to report a higher-scoring condition that will result in higher payment rates.

To understand proper coding of complications, review the ICD-10-CM Official Guidelines for Coding and Reporting. One particularly important guideline is the definition of the word “with” in Section I.A.15 of the 2020 Official Guidelines. If an index entry, code title, or instructional note uses the term “with” or “in,” there is a presumed relationship between the conditions. “These conditions should be coded as related even in the absence of provider documentation explicitly linking them,” the Official Guidelines indicate. The exceptions are if the documentation states the conditions are unrelated or there is a guideline requiring documented linkage of two specific conditions.

Diabetes is an example of a condition that commonly has complications. Roughly 25% of the US population aged 65 or older has diabetes, so this one condition can have a big impact on reimbursement. The HCC a diabetes ICD-10-CM code crosses to varies depending on any complications described in the code. For instance, E11.9 (Type 2 diabetes mellitus without complications) is assigned to HCC 19 in most HCC models, but E11.36 (Type 2 diabetes mellitus with diabetic cataract) is assigned to HCC 18. HCC 18 has a higher relative weight than HCC 19, supporting the idea that capturing the correct ICD-10-CM code is tied to accurate reimbursement.

3. Make the most of ICD-10-CM resources. The ICD-10-CM code set (including instructional notes) and Official Guidelines are essential to your coding accuracy. But there are other authoritative resources, too. In addition to your payers’ policies, which apply to their claims, you also can check AHA Coding Clinic® for ICD-10-CM and ICD-10-PCS, the official publication for ICD-10 guidelines and advice.

For example, 2019’s Volume 6, Number 1, addresses how to code for a patient with a history of COPD and emphysema with COPD exacerbation. The instruction is to report only J43.9 (Emphysema, unspecified) and not J44.1 (Chronic obstructive pulmonary disease with [acute] exacerbation). The reasoning is that emphysema is a form of COPD, and an Excludes1 note prevents you from reporting J43.9 and J44.1 together.

In medical coding, where time is money, finding answers quickly has value. Having the proper resources pays off by improving productivity and helping you reach the thorough level of ICD-10-CM coding required under risk adjustment payment models.

— Deborah Marsh, JD, MA, CPC, CHONC, writes for AAPC, a training and credentialing organization for the business side of health care. She also assists with developing and updating online medical coding tools for physicians and facilities.