HCC Definition

The Centers for Medicare and Medicaid (CMS) implemented an HCC (Hierarchical Condition Categories) model to adjust capitation payments to private health care plans for the health expenditure risk of their enrollees. The Centers for Medicare and Medicaid (CMS) Risk Adjustment Model measures the disease burden that includes several HCC categories, which are correlated to diagnosis codes.

CMS' model is accumulative, meaning that a patient can have more than one HCC category assigned to them. Some categories override other categories and there is a hierarchy of categories.

The following HCCs reflect a few common chronic conditions found in the Medicare population, that Medicare Advantage Plans look for to be documented in a patient's chart:

Diabetes without complications - HCC 19

Chronic Obstructive Pulmonary Disease - 111

Congestive Heart Failure - 85

Breast Cancer - 12

Angina Pectoris - 88

Diagnoses from the previous year are used to establish capitation payments to the Medicare Advantage (MA) plan. The HCC must be captured every 12 months for CMS to reimburse the MA plan, and if the HCC codes are captured outside of that scope of 12 months (for example, 12 months and 4 days), it will then generate a 6-month revenue gap for that MA plan.

It all boils down to the data collection process, which of course always points back to the physician's office and the documentation of the patient encounter.

Physicians who do not exercise good documentation at each patient encounter with the chronically ill will receive fewer resources from health plans and will have less ability to grow.

Good documentation begins at the time of the patient's face-to-face encounter with the physician. It means the physician documents the clinical findings in the medical record, and the medical record is used to determine ICD-9-CM codes. The pertinent information from the patient encounter is submitted to the MA organization for payment.

Guiding Principle:

The risk adjustment diagnosis must be based on clinical medical record documentation from a face-to-face encounter, coded according to the ICD-9-CM Guidelines for Coding and Reporting; assigned based on dates of service within the data collection period, submitted to the MA organization from an appropriate risk adjustment provider type and an appropriate risk adjustment physician data source.

Hierarchal Condition Categories (HCC)