Hierarchical Condition Categories (HCCs) apply to Medicare beneficiaries and Medicaid patients, including those who obtained their insurance through the Affordable Care Act (ACA) marketplace. The reason for the development was to help drive down costs, improve outcomes and reimburse based on clinical attention to chronic conditions over time. The 10,000 CPT codes for chronic diseases map to approximately 260 HCCs. HCCs are “hierarchical” since more complex health conditions are assigned a higher value or weight, (i.e., chronic conditions that are more serious or affect multiple body systems and require more intense and thorough oversight), and also risk-stratify patients by the degree of underlying disease conditions.
Medicare Advantage (MA) insurance plans receive a “capitated” amount of payment, meaning a specific sum of money per patient per month. CMS then developed HCCs in order to pay Medicare Advantage plans differentially based on patient characteristics of age, sex, and underlying disease burden. Within the CMS-HCC model, CMS calculates a Risk Adjustment Factor (RAF) score for each patient based on their age and sex, then it includes additional RAF for any HCC that the patient has. That score is then multiplied by a base sum to give an expected annual expenditure.
This is somewhat analogous to how RVUs are assigned to CPT codes to show how much “work” was done and, therefore, how much should be reimbursed. The difference is that the medical team is reimbursed every month based on this score, and it expects that you, the good physician, will take an active role each month in managing your patient’s chronic conditions, rather than waiting for them to “show up” in the office for a fee-for-service visit.
In addition to risk adjustment for Medicare Advantage plan payment, HCCs are increasingly used to assess the “quality of care” that you and your organization provide. Value-based care is an initiative by HHS designed to reward better care and is discussed elsewhere in this handbook. Accurate coding of ICD-10 and HCC codes capture the severity of your patient’s condition. When a patient has a serious outcome, such as a myocardial infarction, yet appears well by previous coding, or the medical issue appeared unexpectedly, this outcome suggests poorer quality of care. Conversely, when comorbidities or risk factors are documented and patients experience clinical outcomes that are in line with, or better than, the expected outcomes, this suggests better quality of care.
Remember that only you, the physician, is capable of diagnosing. Healthcare payers don’t have regular access to your clinic notes. As important as the “Problem List” and “Past Medical History” are for documentation and justification of CPT codes in case of an audit, chronic ongoing conditions can’t be inferred from these sources. Instead, the payer only “sees” diagnosis codes that are associated with the billing codes. Often, the major issue isn't expanding the ICD-10 code to the fullest description of the disease process and condition.
See this example for how the same patient should be “up-coded” appropriately (this is copied and adapted from the following website: https://www.centrastatehealthcarepartners.com/2019/03/13/hierarchal-condition-category-hcc-coding-for-more-reliable-risk-scores/
Example 1: A 68-year-old patient with type 2 diabetes, hypertension, and a body mass index (BMI) of 37.2. Over the last calendar year, you never mentioned the BKA or the neuropathy in ICD-10 codes, although it is in the PMH and Problem List and you are treating the neuropathy with Gabapentin.
|
ICD-10
|
DESCRIPTION
|
RAF
|
|
E11.9
|
Type 2 diabetes with no complications
|
|
|
I10
|
Hypertension
|
|
|
Z68.37
|
BMI of 37.2
|
|
|
|
Total Risk =
|
0.000
|
Example 2: A 68-year-old patient with type 2 diabetes with diabetic polyneuropathy (albeit stable and without any management), hypertension, morbid obesity with a BMI of 37.2, and status post-left below knee amputation (BKA).
|
ICD-10
|
DESCRIPTION
|
RAF
|
|
E11.42
|
Type 2 diabetes with diabetic polyneuropathy
|
0.0368
|
|
I10
|
Hypertension
|
|
|
E66.01 & Z68.37
|
Morbid obesity with a BMI of 37.2
|
0.365
|
|
Z89.512
|
Status post-left BKA
|
0.779
|
|
|
Total Optimized Risk
|
1.1808
|
*These are sample patients only, using 2017 CMS HCC model values and 2018 ICD-10 codes.
This patient may also have other chronic, but stable conditions, such as vascular disease, atherosclerosis, etc., that were also neglected, to be added specifically as ICD-10 codes, as some physicians may simply put “hyperlipidemia.”
This shows how important it is to submit ALL chronic conditions as ICD-10 codes at least once a calendar year, and how having a system to do this is important if you want to be reimbursed appropriately for your patients. Be aware of the HCCs that “count” because several require increased specificity or the merging of diagnoses.
For example, any acute or chronic problem resulting from diabetes needs to be linked (single, more specific ICD-10 code), like the ICD-10 code example above, rather than using separate codes for diabetes and concurrent neuropathy, nephropathy or other conditions resulting from diabetes.
Medicare requires that HCCs are documented once per calendar year. The Social Security Act prohibits CMS from paying for “annual” preventive exams when billed as preventive codes. Instead, the “Welcome to Medicare” and “Annual Wellness” exams can be used to review and update HCCs, along with performing health maintenance. See the section on Medicare Wellness in Preventive Health and the Appendix for the HCCs.