How HCC coding and RAF impact Value-Based Care Revenue

The relationship between medical complexity, documentation, risk, innovation, and revenue is actually far more simple than it sounds.


We are often asked very broad questions about how all of the moving pieces of VBC work together. How does highly specific and accurate diagnosing with HCC codes relate to patient care? Do HCC codes help patients, or is coding just to generate revenue? How do you avoid under-coding, or over-coding, and harden your charts for an audit? What is the role of the clinician, when there are also coders? How do you educate clinicians on HCC coding, when they barely engage in the seminars? How should clinicians view HCC coding and RAF scores as a component of patient care? 


There are a lot of questions. So in this series of blogs, we are going to lay out a robust and thorough explanation of each piece of the VBC puzzle, share how they relate and impact each other, and by the end, you will have a thorough understanding of both the VBC space and your role in it. 


First, a word about risk. Upside risk, downside risk, two-sided risk, quality scores, stars… there are only really a few things you need to know about risk.

In Value-Based Care, when you take on risk for a patient population you are making a wager. 


Your organization wagers that they can both run a business and keep a patient population healthy for a predetermined dollar amount, set by CMS. If you are caring for a very sick patient population, you will need more resources. And the wager is that your organization can provide effective care within the budget. This incentivizes a care team to keep patients healthy, rather than only treating them when they get very sick. 


The organization that takes on risk is reimbursed in a capitated payment model, paid per-member, per-month (PMPM), based on the Risk Adjustment Factor (RAF) of your patient population the year before. That score is the sum of all RAF scores from the patients in your VBC contract. The RAF score of each patient is the sum of all the diagnosed chronic conditions, documented with Hierarchical Condition Category codes (HCC codes) that risk adjust. CMS payment models typically pay for conditions diagnosed the previous year.


Over the next few weeks, we are going to dig deeper into four central concepts in Value-Based Care, with special attention paid to how each piece impacts patient care. 


– Diagnosing for risk in VBC

– The basics of RAF and how it is calculated. 

– How RAF and Revenue drive Patient Care and Innovation

– RAF, Revenue, Audits and the DOJ


To our VBC clinicians, thank you for the work you’re doing to move patient outcomes to the forefront of healthcare. Thank you for truly caring for your patients – and for your patients with all the required learning, coding and documentation. It matters, you matter, and your healthy patients will thank you.


To our VBC admins, operators and physician executives, your management of all the moving parts and pieces is critical to achieving the pivotal shift from fee-for service to a value-based model. Thank you for your commitment to patient-centric care and clinician satisfaction. Without you at the helm, the system would never change. 

Leave a Reply

Your email address will not be published. Required fields are marked *