October 2, 2020
Hierarchical Condition Category

Hierarchical Condition Category

By janiroot

In the past, medical companies or hospitals used direct payment methods for providing their services to patients depending on the degree of illnesses and need. Insurance companies didn’t have any specific criteria or processes for categorizing and assessing chronic and severe diseases.

What is HCC?

HCC includes specific codes for specific conditions/illnesses, groups of diagnosis codes. More than 9000 ICD-10-CM maps to 86 HCC codes are part of this. This means, not all the specific disease codes come under the hierarchical condition category. Only severe and chronic conditions are concerned with the hierarchical condition category. One HCC code represents two diagnoses or one diagnosis with a complication (e.g., A diabetic patient with diabetic nephropathy or diabetes and angina).

HCC is designed initially to estimate the future health care costs for patients. Society is shifting toward a value-based payment system. The medical system and the Hierarchical Condition Category is an essential step in this aspect. Many insurance companies are using HCC currently.

Relation of HCC and CMS

HCC ( Hierarchical Condition Category) is related to “risk adjustment,” which is a payment system used by centers of Medicare and Medicaid Services (CMS) in 1997 but was implemented in 2003-2004. Besides CMS, many other insurance companies are also using the Hierarchical Condition Category, and this practice is increasing day by day.

Risk Adjustment 

CMS risk adjustment program is a perspective that uses ICD codes from the previous years and demographic (age, gender, living condition) information to predict future costs in management plans (MP).

Why HCC is Used

Hierarchical Condition Category coding helps present the complexity of patients in a simple numerical form. Hence quality and cost information can be easily measured. Medical service providers and insurance companies (CMS) use hierarchical condition category coding for severe and chronic illnesses to provide the patients with advantage plans.  Patients who come under the hierarchical condition category receive better advantage plans. It also categorizes and identifies patients with specific diseases who need immediate attention, better management, and follow-up.

The CPT codes used are specific for procedures performed or treatments needed to establish the required cost, i.e., if any payments are to be issued at all and how much payment a patient is eligible to receive. The amount that a patient receives depends on the severity of the condition from which he/she is suffering from.

CMS also uses hierarchical condition categories to consider factors that can affect long-term health with severe or chronic disease, such as gender, age, living conditions, and eligibility for Medicaid. These are known as additional Risk Adjustment Factors.

How to get Correct Hierarchical Condition 

Category Codes

The diagnosis is made by the physician who is treating and providing care. A Risk Adjustment Factor and additional Risk Adjustment Factors are assigned to each hierarchical condition category. These factors scale the payments. To get accurate HCC codes, both of these aspects should be considered.

CMS uses HCC to make the Medicare Advantage plans needed for the patient. The Medicare Advantage (MA) plan receives a capital amount of money from CMS, which is used to pay for the claims and services for a person affiliated with CMS. HCC score determines the prospective to the capital rate, using the past and present medical record information and the amount needed for the future.

How to Become an HCC Coder

To become an HCC coder, one needs to have an associate degree or medical coding certification. Apply now for a Medical Coding Scholarship to get your certification for FREE.

Tasks of a Medical Coder

A Medical Coder (or HCC coder) converts the medical data of a patient into standardized codes. This includes diagnosis of disease and its complication as well as the necessary treatment. A coder works in a hospital or related medical facilities.

Medical Coding Certifications

  • Certified Professional Coder – AAPC
  • Certified Coding specialist  – AHIMA
  • Certified Coding Specialist Physician based – AHIMA
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