Since its inception, the understanding and significance of HCCs has grown and taken on considerable financial importance for physicians, physician groups (and physician extenders), health systems, and Medicare Advantage plans.ĬMS defines HCCs as a risk adjustment model used to calculate risk scores to predict future healthcare costs. The implementation of HCCs by CMS for the Medicare Advantage plans began in 2000, and they have been steadily phasing in this process over time. The Centers for Medicare & Medicaid Services (CMS) introduced Hierarchical Condition Categories (HCCs) and the architecture of the Risk Adjustment Factor with their mandate in 1997. ![]() The ability to document with greater precision can dramatically impact payment amounts.Lisa Knowles ( is a Compliance, Education and Privacy Officer at Harmony Healthcare in Tampa, FL. For example, diabetes with no complications, HCC code 19, pays a $894.40 premium bonus, while diabetes with ESRD, requires 2 HCC codes, 18 and 136, and has a bonus of $1273.60. Specificity is essential to receive full reimbursement. Organizations who do not document the severity of their patient population to the highest specificity will not receive the appropriate reimbursement amount for applicable patients. ![]() Patients with high HCCs are expected to require intensive medical treatment, and clinicians that enroll these high-risk patients are reimbursed at higher rates than those with enrollees who have low HCCs. HCCs directly impact the amount of money received by healthcare organizations from the largest single payer in healthcare, CMS. Scores are calculated on an annual basis. Healthier patients will have a below average RAF while sicker patients will have a higher one, which impacts the calculated payment amount. The PMPM is the payment amount a provider receives for a patient enrolled in an MA plan regardless of services provided. The resulting score is then multiplied by a predetermined dollar amount to set the per-member-per-month (PMPM) capitated reimbursement for the next period of coverage. ![]() Each HCC associated with a patient is assigned a relative factor that is averaged with any other HCC code factors and a demographic score. The RAF score is then used to calculate payments to healthcare organizations. What is a RAF score and what does it have to do with HCCs?Ī Risk Adjustment Factor, known as a RAF score, is a measure of the estimated cost of an individual’s care based on their disease burden and demographic information. ![]() The top HCC categories include major depressive and bipolar disorders, asthma and pulmonary disease, diabetes, specified heart arrhythmias, congestive heart failure, breast and prostate cancer, and rheumatoid arthritis. The reclassification also changed the number of ICD-10-CM codes represented from 9,700 to 7,770 within the various HCCs. The number of HCC categories expanded from 86 to 115 when CMS clinically reclassified the model. HCC codes represent costly chronic health conditions, as well as some severe acute conditions. What kinds of conditions do HCCs represent?
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