The HCC and RxHCC codes impact payment to a health plan differently. The HCC codes create a Part C risk score that is then multiplied times the plan’s monthly bid to care for an average member (risk score 1.0). These payments are essentially final in the sense that actual medical expenditures are not reconciled later in the year – that is – the plans are carrying the collective risk for their patients.

Similarly, the RxHCC codes create a Part D risk score that affects the direct subsidy portion of CMS’s payment to health plans to help cover upcoming pharm expenditures. The difference is that these prospective pharmacy costs are then reconciled with actual pharma expenditures at year-end for that patient, and the plan may receive the difference or pays the excess back to CMS. This is a simplified explanation, but it highlights the facts that CMS and health plans are sharing risk on pharma expenses, and that unlike Part C HCC codes and medical expenditures, there is in Part D a process to compare projected versus actual pharma expenditures.

So, many common ICD-9 codes like GERD, Hypecholesterolemia, Hypertension, are only in the RxHCC model. When a provider submits these codes, the health plan will receive additional funds to cover the projected costs of related meds like statins, proton pump inhibitors, etc. Again, at year end CMS will reconcile projected versus actual and settle up with the health plan. So, RxHCC codes, when properly submitted help ensure that plans can pay for drug expenditures with current monies rather than borrowed money and reconciling later.

All Part D plans, whether combined MA-PD plans or stand alone Part D drug plans must submit to CMS a Prescription Drug Event report for each drug dispensed.  This is a subset of the pharmacy claim information generated at the time of dispensing.  This helps CMS calculate retroactive payments to plans during a reconciliation period.  Plans are payed initially prospectively and the direct subsidy portion of their Part D payments from CMS is ICD-9 or HCC risk adjusted, but the reconciliation phase allows for payments  to be more in line with actual expenditures.

Interestingly, starting this year, 2009, plans must report on the PDEs, the source of the prescription. 
0 = Not Specified
1 = Written
2 = Telephone
3 = Electronic
4 = Facsimile
This will enable CMS to get an idea of the frequency of e-prescribing.

CMS recently released the updated Part D Training Guide, which can be downloaded here.  File is 2.5MB, need Adobe reader – pdf. You can right click and “Save target as” to save file.

Remember, several of the ICD-9s that map to HCCs also automatically map to RxHCCs as well, so the patient’s Part C and Part D risk scores can both go up with the capture of one ICD-9 code.   For example, the ICD-9 for Congestive Heart Failure, unspec. (428.0) maps to both HCC 80 and RxHCC 91, so the patient’s monthly capitated payment for both Part C and Part D will go up.

Both the HCC and RxHCC payment models contain groupings or hiearchical condition categories of related disease states such as diabetes, infection, or cancer.  The model is set up so that only the most severe form of a particular disease is reflected in the patient’s risk score and payment.  The CMS-HCC model contains 70 HCCs in the standard community model (usually covers more than 95% of all patients in a plan), and there are 84 RxHCCs in the Part D model.

The CMS Risk adjustment processing center will determine the RxHCC codes for a member based on ICD-9 codes submitted by the plan that were cultivated from face to face visits.  The plan cannot submit suggested ICD-9 codes from their interpretation of pharmacy claims data.  For example, if the pharmacy data shows the use of spironolactone, it is unclear if the medicine was used for hypertension, heart failure, or simply to counteract the hirsuitism in polycystic ovary syndrome (PCOS).  So, because a single drug may be used for so many different and even off-label uses, one cannot assume from the pharmacy claims data alone why the drug was prescribed.  However, non qualifying data sources like pharmacy data is data-mined by some of the better data mining software out there to suggest the presence of HCC codes.  If the MA plan’s data mining software identifies the use of spironolactone and has ICD-9 codes in the database that show edema, shortness of breath, there is a good chance there may be an HCC 80 (Heart Failure) somewhere in that patient’s medical records.  HCC 80 is worth over $2,500 to a plan, surely worth looking for.  In one California plan that I have analyzed, HCC 80 is a top-ten most common reported HCC code.

By the way, this helps illustrate how the data mining software works to identify prospective charts for audits.  In this example, one mines the non-qualifying data such as CPT, HCPCS (DME) or pharmacy claims to look for data that suggest a relevant ICD-9 code in the CMS-HCC model.  The other major way data mining software works is to look for ICD-9 or HCC codes for chronic conditions that were reported last year, but “fell off”.  This second method is based on “permanence” of HCC codes, the idea that chronic conditions do not go away.  Lastly, an HCC code itself can suggest the presence of another, such as HCC 19 uncomplicated diabetes might prompt the chart reviewer to see if there is documented evidence of any complication of diabetes that would warrant a more valuable HCC code, such as HCC 16 Diabetes with Neuro complications.  This last diabetes examples illustrates how a clinically-trained coder can maximize code recovery.  Most coders may not be aware that a diagnosis of Charcot’s arthropathy is in fact a neurogenic arthropathy that would allow a diabetic to be coded as diabetes with neurologic manifestations.  Not having astute, clinically trained certified coders in the clinics to recover the prospective HCC codes can lead to the loss of a tremendous amount of revenue. 

There are 84 RxHCC codes in the Final Part D Risk adjustment model as published by CMS in their Announcement of Calendar Year (CY) 2006 Medicare Advantage Payment Rates.

RxHCC Codes