What’s New in Diagnosis Coding?

Change is coming in payment models for physician practices. The repeal of the sustainable growth rate formula and replacing it with the merit based incentive payment system (MIPS) and the alternative payment models (APM) provide a fundamental shift for physician practices.

Physician claims are paid based on the CPT code on the claim form. The diagnosis code establishes the medical necessity for the service and can often be the reason for a denial. But how sick a patient is doesn’t change the payment on individual claim form for the physician. In the hospital, diagnosis related groups (DRGs) have long been the norm in determining payment, paying more for the care of sicker patients. But in most medical practices, fee-for-service medicine is the rule of the land. In the new payment models, individual claims will continue to be paid on a fee-for-service basis. But in future years, starting in 2019, there will be a penalty or an incentive payment built on top of the fee-for-service revenue. Although the models are complex, part of the calculation will be based on quality measures, which includes the acuity of the patient population.

How does Medicare or a payer know how sick your patient population is? They know based on the diagnosis codes that are submitted on the claim form. This means that physician practices must significantly increase the accuracy and the completeness of the diagnoses that they submit on a claim form for payment. Although it won’t change the payment for that current claim, it will provide information that will affect future payments.

Some groups already have risk-based contracts with private payers. Some physician practices have started or joined an accountable care organization (ACO) and, if so, their diagnosis coding is already important in determining overall payment. Medicare has announced a demonstration program called comprehensive primary care+, which will provide a per-member-per-month fee for caring for patients. The amount of the per-member-per-month fee will be based on diagnosis coding.

Medicare uses a system called hierarchical condition categories (HCCs) for their diagnosis risk assessment. This is the system that Medicare has used to pay Medicare advantage plans for years and they going to use it for the CPC+ program. Although private payers may use a proprietary system in the risk factor adjustment, understanding HCCs will better serve a practice as we begin the transition to risk-based adjusted coding.

When you hear about these new payment models, remember that the penalties and bonuses are built on top of your fee-for-service revenue. Don’t forget that CPT coding will continue to drive the majority of physician revenue for most medical practices in the years to come. Make sure that you’re capturing your fee-for-service revenue entirely and accurately. But pay more attention to the accuracy and completeness of your diagnosis coding to reap benefits in the future.

Blog Comments

HCC Diagnosis Codes
Thanks for sharing the valuable post. Risk Adjustment Model includes nearly 80 HCC categories of chronic illnesses with thousands of diagnosis codes. There are more than 9,000 ICD-10 codes that map to 70 HCC codes in the Risk Adjustment Model.
3/23/2018 1:26:47 AM

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