Most health plans obsess over HCCs. They build entire departments around maximizing hierarchical condition categories. They invest in retrospective coding, prospective review, and audit prep. But there's another risk adjustment model running in parallel that gets way less attention: RxHCCs.
The Prescription Drug Hierarchical Condition Category model determines payments for Medicare Part D. It works differently than the medical HCC model, uses different diagnosis codes, and creates completely separate revenue opportunities. Yet many organizations treat it as an afterthought, if they think about it at all.
That's a mistake. RxHCC revenue represents real money, and the gap between what you're capturing and what you could be capturing is probably larger than you think.
How RxHCC Actually Works
The RxHCC model predicts a beneficiary's expected prescription drug costs. CMS uses diagnosis data from the previous year to calculate the next year's Part D payments. If a patient has conditions that indicate high medication needs (like diabetes, HIV, or chronic liver disease), the model assigns RxHCC codes that increase the capitation payment.
Here's the critical part: the model pulls diagnosis codes from medical claims, not pharmacy data. Your patient can be on expensive HIV medications all year, but if the provider never documents the HIV diagnosis in a billable encounter, the condition won't trigger the RxHCC payment.
This creates a strange disconnect. The pharmacy benefit is paying for the medications. The medical side is treating the condition. But if the documentation and coding don't connect the dots, the Part D plan loses revenue it's legitimately entitled to.
Where Organizations Miss RxHCC Revenue
The most common problem is simply not looking for RxHCC opportunities. Your retrospective coding team is hunting for medical HCCs. They're trained to find diabetes with complications, CHF, and CKD because those drive CMS-HCC revenue. They're not necessarily thinking about which of those conditions also map to RxHCCs.
Diabetes is a perfect example. A patient with Type 2 diabetes generates an HCC. But diabetes also maps to RxHCC category 19. If your coders are focused solely on capturing the medical HCC, they might not realize they're also supporting Part D revenue with the same diagnosis.
Another gap appears in specialty conditions. Your retrospective team might not be reviewing oncology notes or infectious disease charts as aggressively as primary care encounters. But those specialty conditions often carry significant RxHCC value. A patient with hepatitis C might generate minimal medical HCC revenue but substantial RxHCC revenue because antiviral treatments are expensive.
The Documentation Challenge
RxHCC coding faces the same MEAT criteria requirements as medical HCC coding. The condition needs to be monitored, evaluated, assessed, or treated during the encounter. A historical diagnosis without current relevance won't support the code.
This gets tricky with conditions like HIV or hepatitis C. Patients on stable antiretroviral therapy might see their provider quarterly for routine monitoring. The visit note might focus on labs and medication refills without much narrative about the underlying condition. That's adequate for MEAT criteria, but coders need to recognize it.
Cancer presents another documentation challenge. Active treatment for cancer generates RxHCC codes. But once treatment is complete and the patient is in remission, the codes no longer apply. Your coders need to distinguish between active disease requiring treatment and historical disease that's been cured.
Building an RxHCC Strategy
Organizations that capture RxHCC revenue well do a few things consistently. First, they educate their coding teams about which conditions map to RxHCCs. Not every HCC has a corresponding RxHCC, so coders need to know which diagnoses serve double duty.
Second, they integrate RxHCC identification into their existing workflows. If you're already running retrospective chart review, adding RxHCC to the review criteria is straightforward. The same chart that supports an HCC might also support an RxHCC. You're not adding work; you're capturing additional value from work you're already doing.
Third, they pay attention to pharmacy data. If your Part D plan shows high-cost drug utilization for conditions that aren't showing up in your diagnosis data, you've got a problem. A patient on Harvoni (hepatitis C treatment) should have corresponding hepatitis C diagnosis codes. If they don't, you're subsidizing expensive medications without getting the payment adjustment you're entitled to.
The Financial Impact
RxHCC revenue per member is smaller than medical HCC revenue. The payment amounts are lower because drug costs are lower than total medical costs. But smaller doesn't mean insignificant.
A health plan with 25,000 Medicare Advantage members might be missing several hundred thousand dollars annually in RxHCC revenue simply because they're not looking for it systematically. That's money you earned. The members have the conditions. The medications are being prescribed. The documentation exists. You're just not coding it.
Add that up across your book of business, and RxHCC becomes worth the attention. It won't replace your medical HCC program as a revenue driver. But it's too big to ignore and too easy to capture once you build it into your workflows.
Stop treating RxHCC as an afterthought. Your pharmacy benefit is expensive. Make sure you're getting paid appropriately for the patients you're covering.
