Tip: CDI specialists should learn how HCCs work

The concept of Hierarchical Condition Categories (HCC) is not new; CMS implemented the HCC model in 2004 as a way to determine capitated payments for Medicare Advantage plans. With the number of patients enrolled in Medicare Advantage tripling in size since 2004 and the expansion of HCC models to Part D plans (under the CMS-RxHCC model) and commercial payers (under the HHS-HCC model), though, improving documentation to appropriately capture HCC-related conditions needs to be on radar not only for those seeking to expand review targets into the outpatient arena but also for those working in traditional inpatient care settings.

So, let’s take a moment to go over the basics of HCCs.

HCCs are determined by grouping certain ICD-10-CM codes that significantly affect the cost of care for a patient into ranked categories of related codes which have a similar effect on resource use. First, the thousands of ICD-10-CM codes are separated into diagnostic groups, each representing a specified medical condition. These are further separated into condition categories, which represent a broader set of clinically and financially similar conditions. Since it’s similar to the MS-DRG grouping system, the rationality here should be familiar to CDI professionals.

The condition categories also incorporate a hierarchy to ensure that only the most severe manifestation of the disease is coded. Each HCC has an assigned weight which will be added into the total risk adjustment factor (RAF) score, should it be included in a payment model. Hierarchies are arranged so that conditions that are higher-ranked account for at least as large of a payment weight as all of the lower-ranked conditions. The lower the number of the HCC, the higher the severity of the condition.

For example, diabetes mellitus would be arranged into a hierarchy of:

• HCC 17, Diabetes mellitus with acute complications
• HCC 18, Diabetes mellitus with chronic complications
• HCC 19, Diabetes mellitus without complications

If a patient has two diagnosis codes, one of which would fall in diabetes with acute complication and the other of which would fall into diabetes with chronic complications, only the most severe of those would factor into that patient’s risk score because the more severe HCC covers the payment weight of the lower-ranked HCC.

While the CMS-HCC model includes 90 condition categories, other models vary in size. For instance, the HHS-HCC model includes approximately 120 HCCs. The definition for HCCs under each model can also be different—an HCC in the CMS model may not be the same as an HCC for similar condition categories in the HHS model.

A patient’s final risk score is based on the sum of a demographic score (based on factors such as the patient’s age, sex, disability status, etc.), scores for HCCs, and an added score for interactions between HCCs. The interaction score is assigned only when a patient has a combination of two or more diseases which would incur more costs than the sum of the individual diseases alone.

A RAF score equal to one represents a patient who uses an average amount of resources. Patients with RAF scores higher than one require more resources than the average. Conversely, patients with RAF scores lower than one will use fewer resources than average.

Editor’s note: This article was originally published in JustCoding. To purchase an in depth on-demand webinar about HCCs and risk adjustment, click here.