HCCs: The Cost of Chronic Conditions


Hierarchical Condition Categories (HCCs) have been a part of our coding, documentation, and reimbursement landscape since their implementation by Medicare in 2004. HCCs were initially put into place by the Centers for Medicare & Medicaid Services (CMS) to provide accurate and timely capture of data, but also to track a patient’s care and condition over time.

The original goal of HCCs was to ensure that money could be earmarked to cover a patient’s future medical needs. This model has been the basis for CMS to reimburse Medicare Advantage (MA) plans (Medicare Part C) based on the health of its members.

Today, HCCs as a risk adjustment model is undergoing more scrutiny, since risk adjustment factor scores impact annual capitation rates for the MA plans. Now, for HCC to be successful, the provider must report all diagnoses that impact the patient’s evaluation, care, and treatment, including coexisting conditions, chronic conditions, and treatments rendered on an annual basis.

These life-altering chronic conditions seem to be the most challenging when it comes to proper HCC documentation and maximizing reimbursement for physicians and hospitals. This article provides an in-depth overview of HCCs for health information management (HIM) leaders and coding professionals.

Top 10 Chronic Conditions

The top 10 chronic and life-altering HCC groups are the following:

  • Chronic obstructive pulmonary disease
  • Congestive heart failure
  • Vascular disease
  • Cancer
  • Ischemic heart disease
  • Specified heart arrhythmia
  • Diabetes
  • Ischemic or unspecified stroke
  • Angina
  • Rheumatoid arthritis
  • Inflammatory connective tissue disease

Since the implementation of ICD-10, coding HCCs for these chronic health conditions has become more challenging due to the use of combination codes for conditions, common symptoms, and manifestations.

A single combination code may be used to classify two diagnoses, a diagnosis with an associated sign or symptom, or a diagnosis with an associated complication. Disease interactions definitely impact reimbursement. For correct coding in ICD-9, manifestation and etiology codes were required in the proper sequence. Today, combination codes allow the use of only one code, resulting in fewer cases with multiple codes and a reduction in sequencing problems.

The challenge for coders is getting physicians to thoroughly report on each patient’s risk adjustment diagnosis based on clinical medical record documentation from a face-to-face encounter. Certain documentation in the medical record must be present for a condition to be reported on a claim. The lack of this documentation directly affects the reimbursement level for an HCC claim.

Diseases and conditions are organized into body systems or similar disease processes. 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
  • Rheumatoid arthritis
  • Colorectal, breast, kidney cancer

Patients are often assigned more than one HCC because the combination of demographic information and risk factors can accrue to denote more than one kind of illness or prospective illness. This presents unique challenges for coding teams.

When Multiple HCCs Arise

The CMS model allows for multiple HCCs per patient. Some categories override others within a hierarchy of categories. About one-third of the HCCs are in hierarchies that ensure a patient is coded for only the most severe manifestation among related diseases.

Using diabetes mellitus (DM) as an example, DM combination codes (example: E11.21) include the type of diabetes (Type 2), the body system affected (kidney), and the complications affecting that body system (nephropathy). Diabetes also occurs in multiple HCCs based on the type of complication:

  • HCC 18 Neuropathy
  • HCC 19 Diabetes without complications
  • HCC 122 Proliferative diabetic retinopathies

These categories involve the use of numerous combination codes to accurately document the role of diabetes in the HCC. The financial portion provided by CMS for the annual care of a diabetic patient is greatly impacted by the accuracy of both ICD-10 combination codes and HCC coding. Considering the fact that 29.1 million people (or 9.3 percent of the U.S. population) had diabetes in 2012, our nation’s budget for this population’s annual care is strongly impacted if quality clinical documentation is not maintained.

Key Factors to Maximize Revenue Using the HCC Model

There are three important steps to take in order to maximize and protect revenue under HCCs.

Use linking language: Physicians must use “linking language” in their documentation (due to, related to, because of, etc.) if there are two different HCCs, such as congestive heart failure and diabetes. The proper linking language documenting the causal relationship for manifestation codes (diabetes and the associated CHF) will qualify for maximum reimbursement.

Conduct an annual risk adjustment assessment: It is imperative for physicians to document the HCCs in detail, on an annual basis. Be sure to assess the severity of the illness and risk of mortality for each patient annually to determine how much the MA plan will be reimbursed for the care of a patient. The year after a patient is diagnosed with diabetes – when services rendered include multiple trips to an endocrinologist, admissions due to foot ulcers, regular blood sugar testing, etc. – impacts revenue and is more influential than the year prior, when all you had were social and demographic factors.

Report chronic conditions: Again, this comes down to documentation. If critical information is not documented during each patient encounter with the chronically ill, a physician will lose revenue. If a lab test concludes that a diabetic patient’s sugar is high and the physician does not note this in the chart, the opportunity to increase revenue is lost, since the coder can only code from the physician’s documentation and not from the lab test.

The main goal of the HCC model is to promote better health management along with accurate reimbursement from MA plans. With 1.4 million Americans diagnosed with diabetes every year, the door remains open for increased reimbursement through clinical documentation improvement and coding specificity. The only way to receive proper reimbursement from CMS –and to improve your revenue cycle – is to provide timely and accurate HCC documentation.

EDITOR’S NOTE: The initial erroneously reported information regarding the current HCCs for Medicare Risk Adjustment. We regret the error.

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