5 Reasons Why Hierarchical Condition Category Coding Matters

You’ve probably heard of the hierarchical condition category model (HCC) and wondered if it is worth implementing for your practice. Well, there are several reasons why it matters. Here are six of the most important reasons for using HCC coding. These reasons are critical for the success of your organization. So keep reading to learn more! Here are 5 Reasons Why Hierarchical Condition Category Coding — Foreseemed Matters.

189 condition categories

Hierarchical condition category coding (HCC) is a systematic way to classify clinical diagnoses and their costs. It uses a risk-adjustment model to identify individuals with common, severe diseases and stratify them into different cost categories. The system began in 2004 and is now being used more widely as healthcare moves toward value-based payment models. The CMS-HCC model utilizes 189 condition categories, each of which has a specific value for Medicare.

The American Academy of Family Physicians recommends HCC coding because it helps communicate the complexity of a patient and paints a complete picture. HCC coding also helps to track cost, quality, and performance metrics. In addition, governments and payers use it to measure quality and efficiency. Finally, the CMS-HCC method has the added benefit of capturing more comorbidities than Charlson and Elixhauser.

Risk Adjustment Factor score

HCC, or hierarchical condition category coding, is a method for categorizing a patient’s long-term health and complexity. By using RAF scores, providers can better account for individual patient complexity and risk differences by creating accurate cost and quality performance metrics. This course covers how to use RAF scores to determine the cost-effectiveness of different approaches to health care.

Using risk adjustment factor (RAF) scores in hierarchical condition category coding can have significant financial consequences, especially for Medicare Advantage patients. The RAF scores are calculated by combining each risk factor and multiplying it by the average Medicare Advantage patient rate (usually between $750 and $880). Once this equation is calculated, the total amount of payment that the patient will receive will be revealed. A simple example would be a 68-year-old male patient who has multiple conditions. If HCC coding was appropriately done, this patient could receive substantial reimbursement.

Recommended by AAFP 

HCC coding for chronic conditions is recommended by the American Academy of Family Physicians (AAFP) because it helps providers and payers understand the complexity of patients and paint a comprehensive picture. HCC coding can also help measure the quality, efficiency, and cost of care provided to a patient. Risk adjustment is a mechanism insurers and governments use to maximize cost-effective care for patients.

The HCC code set is an acronym for Hierarchical Condition Categories. This system groups similar clinical diagnoses into 189 condition categories. These categories are then arranged hierarchically based on their severity. In addition, specific diagnoses are excluded from the hierarchy if they are medically insignificant, transitory, or do not significantly impact healthcare costs. This leaves a final count of seventy categories used to risk-adjust Medicare payments.

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