Preparing for Major HIPAA Security Rule Changes
February 26, 2026HCC Documentation and Coding
It does make sense – if a patient is “sicker,” the Medicare Advantage (MA) program gets more money to care for them, which they then pass down to the medical practice or hospital that has been taking care of the patient and documenting the diagnosis codes that support the “sicker” conditions.
Makes sense, but as seen in several examples, the Department of Justice is going after the MA (most of which are commercial insurance companies) when they determine that the “after the fact” analytics has resulted in an addendum to increase the severity/acuity of the patient’s conditions. Kaiser recently paid back $556 million, and Cigna Group $172 million. This “debate” has been going on for years, and it started with whistleblowers many years ago.
A little history helps. This is all about money. No surprises. For providers, it’s knowing that if they reported every chronic condition that impacts the severity of the patient to the MA, the MA turns around and reports this to CMS – which then results in higher payment for the MA and flows down to the practices.
Why has it been a “debate”? First, the audit program used by the government, RADV (Risk Adjustment Data Validation), has been around since 2018, but it did not go through the Federal Register for comment and approval as a regulation until February 1, 2023. Until that time, the argument could be made that not abiding by RADV was not a regulatory problem. It was an internal approach used by CMS, but not a regulation, not a “requirement”. By making it a “regulation,” it was moved to a higher level of compliance until it became effective April 3, 2023. Further, it wasn’t until this finalized regulation that the rule included extrapolation starting in plan year 2018.
During the interim, investing in nurse auditors and technology to identify the patient’s chronic conditions became the “gold standard” for improving the risk scores. Now, it’s the technology that the DOJ is using as part of its Work Plan to identify possible abuses.
For 2026, what should providers be doing to report the best and supported risk scores?
- Look for ways to provide support to the physicians and APPs regarding the required documentation for the chronic conditions.
- Provide opportunities to provide better care and document the chronic conditions – use of Annual Medicare Visit is one possibility.
- Provide “support” to the providers – in a way that helps them capture the right information on the condition, and how it’s being treated.
- Provide notations to providers regarding prior year chronic diagnostic codes and focused citations on what counts as an HCC. A good use of analytics and AI.
- Provide periodic – and short – educational sessions on what counts to increase risks.
- Include a note of fairness and authenticity (and compliance) in what should be reported as the risk conditions.
- Perform focused audits to help the providers identify opportunities.
- Be careful on how incentives are created – not only by looking at problematic regulatory approaches – but also creates friction with providing good care to the patients.
- Minimize and possibly eliminate the use of addendums.
One of the concerns that providers have is that they have limited time with a patient. The focus is on taking care of why the patient is visiting today – reporting conditions and treating conditions that add to the risk score is simply not top of mind. Added to that, CMS is performing studies that show that patients with chronic conditions are not seeing their doctors or other providers as often as previously believed, and is looking to reduce the amount of payment.
There are many “programs” being created to reduce the overall costs of healthcare by improving care plans and coordination. The greatest question will be if the identification and reporting of risk can be included in other programs as well.
Charlotte Kohler , RN, CPA, CVA, CRCE, CPC, CPCO, CEMC, is the President of Kohler HealthCare Consulting, Inc. She oversees the organization’s overall operations, strategic direction, and financial performance. With over 30 years of experience in the healthcare industry, Charlotte has developed and maintained strong relationships with clients. Her areas of expertise include expert witness litigation, compliance work, and providing formal training on healthcare coding standards and industry regulations, all of which contribute to enhancing the financial performance of KHC’s clients. Charlotte takes a collaborative approach to decision-making, valuing input from key stakeholders within the firm. Charlotte adopts a collaborative approach to decision-making, considering input from key stakeholders within the firm.
Heather Dunlap CPC, CDEO, CEMC, CRC, CHONC , CPC, CDEO, CRC, CEMC, CHONC, serves as a Manager at Kohler HealthCare Consulting. Her tenure in the healthcare industry exceeds two decades, focusing on critical areas such as coding, compliance, audit reviews, billing, and resolution of insurance denials. Ms. Dunlap demonstrates proficiency in established coding guidelines and systems, including E&M, CPT-4, HCPCS, and ICD-10-CM. Furthermore, she is dedicated to advancing the knowledge of healthcare professionals regarding legal and ethical coding and documentation practices.
