Hierarchical Condition Category

Hierarchical Condition Category (HCC) coding is a risk adjustment method used by The Centers for Medicare and Medicaid Services (CMS). HCC is used to identify patients with serious illnesses and chronic conditions and assign those patients a Risk Adjustment Factor (RAF) score. CMS then uses risk adjustment to account for differences in beneficiary-level risk factors that can affect outcomes and cost to enable more accurate comparisons across providers and practices for programs like the Merit-based Incentive Payment System (MIPS).

HCC separates different illnesses and chronic condition diagnoses into categories that represent conditions with similar cost patterns. There are over 68,000 ICD-10 codes. Of those, more than 9,000 codes map to the 79 Hierarchical Condition Categories currently active in the risk adjustment model. Each diagnosis code is assigned a weight. When reported, the code’s weight is added to the patient’s RAF score. The sicker the patient, the higher the RAF score. CMS uses these RAF scores to predict health care costs for the following year. A patient’s RAF resets annually, so each HCC code must be reported on a claim once each calendar year for CMS to recognize that the patient still has the condition.

CMS also requires proper documentation in the patient’s medical record for each reported diagnosis. HCC documentation requires a face-to-face visit, documentation of the condition and its status, the provider’s assessment, and a treatment plan. An easy way to remember what must be documented for HCC coding is the acronym MEAT.

  • Monitor – document the signs, symptoms, and disease progression or regression
  • Evaluate – document test results, medication effectiveness, and response to treatment
  • Address – document tests that were ordered, discussions with the patient, record review and counseling
  • Treat – document medication, therapies, and other modalities

HCC coding is a useful and important tool for providers. It ensures an accurate picture of overall patient health and ensures proper risk adjustment for evaluation measures such as the MIPS Cost Category. The more detail CMS has on a patient population, the better the reflection on a provider’s cost score will be.

For more information listen to the recording of HQI’s Understanding HCC Coding for the MIPS Cost Category webinar.

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