HCC Coding - Risk Adjustment Model in Value-Based Healthcare Software Development

Value Based Care or VBC is a cost efficient and population health management model for improving the quality and outcomes for the patients. It is focused on managing the health of a population and to stop any chronic disease to occur! Healthcare Providers are compensated for helping patients enhance their health, reduce the effects and occurrences of chronic disease, and show evidence that their patients are living healthier lives. Value-based care is different from the standard fee-for-service model in that providers are paid in part, or completely, based on the financial value of the healthcare services they provide. HCC coding stands for hierarchical condition category coding.

Such a model is efficient in managing large populations, control any widespread of a chronic disease and also understanding the trends of the lifestyle of a region. Hospitals and Governments all over the world have started to adopt this model to better understand their population and guide them towards a healthy lifestyle. This compensation plan in this model has proven to be cheaper and more effective than the traditional fee-for-service model. 

But how does it work?

The possibility of a chronic disease is identified with the help of Biomarkers. These risk biomarkers are identified by analyzing population cohorts. Biomarkers include everything from blood pressure and heart rate to basic metabolic studies and x-ray findings to complex histologic and genetic tests of blood and other tissues. They are measurable and do not define how a person feels or functions. Based on the evaluation, we can define the risk adjustment level of a population

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The Risk adjustment is a methodology that equates the health status of a person to a number, called a risk score, to predict healthcare costs. The “risk” to a health plan insuring members with expected high healthcare use is “adjusted” by also insuring members with anticipated lower healthcare costs. The Risk Adjustment Factor score or the RAF Score is what providers need to focus on. To derive the right health plan, there are various Risk Adjustment Models that Healthcare Tech Companies can incorporate in their software solution, most efficient and widely used being the Hierarchical condition category or HCC Coding model.

HCC model is exclusively designed for estimating future healthcare costs for patients. The process of HCCs medical coding started in 2004, but it recently gained popularity due to payment models shifting from fee-for-service (FFS) to value-based care (VBC) arrangements. This prospective payment model based on RAF does 2 things:

1. Aligns physician incentives. Currently, clinicians make money from taking care of sick patients. The sicker the patient, the more visits, tests, surgeries they have to do, and the more they are reimbursed. In this model, clinicians are incentivized to keep patients healthy and therefore require LESS tests and surgeries.
2. Spurs clinical innovation the right way. Right now, pharmaceuticals and medical hardware companies are all trying to find ways to treat diseases. The newer the drug or medical device, the more revenue they make. In this model, healthcare groups are incentivized to find new ways of preventing the disease progression from ever needing the latest drug or newest medical surgery equipment.

Incorporating such a model to train the Healthcare providers and also assist them in providing efficient Health Plans to their patients in a Health-tech software is an excellent feature and marketing strategy for the future of any Healthcare-based Software development as HCC coding is here to stay and will only grow in the years to come. While the market has heavily leveraged medical coders or third party vendors to do much of the lift thus far, V2 of Value-based Care will require all clinicians to understand and participate in it for every patient visit: https://www.silstonegroup.com/