The HAUTE HCC Blog with TMI:  Free HCC Resources and TIPS For 2014 – dedicated to HCC Coding and Risk Adjustment for Medicare Advantage Plans

By Holly Cassano, CPC, AAPC ICD 10CM Certified ,Director of Coding Education and Compliance for Tactical Management Inc., (TMI)

CLIFF Notes for HCC Coding – A Three Part Series on Hierarchical Condition Categories (HCCs)

Part 1 – A long Time Ago in a Medicare Office Far, Far Away

It has been a decade now since Medicare (CMS) initially implemented the Risk Adjustment Model that included Hierarchical Condition Category (HCC) Codes. In 2004, CMS decided that in order to “adjust” and better control costs associated with “risk” for Medicare Advantage Plans, the agency should implement an HCC Coding system. The HCC coding system would also be able to provide CMS with a reimbursement methodology that would assist with predictive modeling of health expenditure risks for plan enrollees.

When discussing Risk Adjustment, Hierarchical Condition Categories (HCCs) go hand in hand with every conversation, as HCC codes are the key ingredient to a successful Medicare Advantage Plan (MA). HCC codes are the primary mode of how an MA Plan is reimbursed from CMS.  It is in a Plans best financial interest to ensure accurate and annual capture of these codes from providers within the Plans network.

HCC’s – Disease Indicators or Money Makers?

HCCs (Hierarchical Condition Categories), are Chronic Disease groupers that are organized into the various body systems. Each diagnosis code is clinically relevant as it relates to dollars spent annually by the Medicare program. The CMS Risk Adjustment Model includes 3166 Diagnoses that map to approximately 79 HCC groupers, for Fiscal Year 2014.

The HCC codes drive the premiums that CMS pays out to a Medicare Advantage plan. The Hierarchy comes into play, as each HCC code correlates to several ICD 9 CM (and ICD 10CM on Oct 1st, 2014), diagnosis codes. A provider often will treat a patient/member, that has multiple HCC categories assigned to them, because they are being treated for multiple Chronic Conditions.

CMS was smart and designed the HCC model to be cumulative, meaning that every additional diagnosis code recorded and submitted will result in higher reimbursement back to the MA Plan. CMS also designed the HCC model to allow for what is termed as an “override functionality,” hence, a hierarchy of categories/diagnoses,  that allows one HCC category to trump/override another in order to better reflect the Chronic Condition(s), that are actively being treated.

Key Performance Indicators (KPI) of HCC’s

There are several KPI’s in the CMS-HCC model, which utilizes diagnoses submitted/extracted from physician visits, hospital inpatient & outpatient stays, SNF’s, ALF’s and Home Health encounters to assign an HCC category or several to a Plan member.  The HCC codes assigned may range from zero (unusual for a person aged 65 or older), to an member with several assigned HCCs.

A good example of this is reflected by a member who might have Chronic Kidney Disease, Type 2 Diabetes and COPD, each HCC code will reflect increments or Hierarchies, for each of these chronic conditions.

Frequently Occurring HCC’s

The following is a list of some of the most frequently reported HCC’s found in the Medicare Advantage population:

-  Acute Myocardial Infarction – HCC 81

-  Diabetes with Renal or Peripheral Circulatory Manifestation – HCC 15

-  Congestive Heart Failure –  HCC 80

-  Ischemic Heart Disease – HCC 92

-  Chronic Obstructive Asthma w/Acute Exacerbation – HCC 111

-  Chronic Obstructive Pulmonary Disease – HCC 108


-  OLD MI – ICD 9 412/ HCC 83,  Has been deleted from the 2014 RA Mode

Mr. Jones’ Amputated Leg Grew Back – What? What?

No, it’s not a revamped version of the Counting Crowe’s “Mr. Jones,” sorry to disappoint, it is however, true in the eyes of CMS.  On January 1st of each new year, CMS rings in the “blank slate” caveat for Risk Adjustment, to the groans of all MA Plans.

CMS actually turns the clock back to zero for previously reported HCC codes on Plan members and wipes the slate clean.  This means that every MA member has a Zero Risk Adjustment Factor Score (RAF) and zero reported HCC’s for the new year.  So, in essence, the Below Knee Amputation, Doctor Orthopedic did on Mr. Jones in 2013, has virtually grown back per the CMS Risk Adjustment Calendar.   I’m sure Mr. Jones wishes it actually did, but alas, he still needs a prosthetic to golf with.

ALL ICD 9CM codes that were previously reported by providers and submitted to CMS by the MA Plan for the prior year, have been “dropped off” by CMS and providers and Plans must start all over again with the pursuit of Current Chronic Conditions and correlating HCC codes for the new year.

HCC Tip 

-  The HCC codes determine overall acuity of members within a Medicare Advantage Plan and are added to their annual Risk profile. CMS recommends reporting Active Chronic Conditions, once per year (twice is best), in order to effectively capture a members Active Health Risk Profile.

Final Thoughts

Part Two of the series will discuss A “Two-Pronged Approach” to Risk Adjustment. This area will focus on collaborative efforts between Plans and Coding professionals to ensure that M.E.A.T. (MONITORED/EVALUATED/ ASSESSED/ TREATED), is documented in the Medical Record.

“Provider Education is Key to a Plan’s success.”

For futher information on Risk Adjustment please click on the following link to SCAN Health Plan, a leader in the Risk Adjustment community:




 Document Those HCC’s!!!


Holly Cassano, CPC, AAPC ICD 10CM Certified

Director of Coding Education and Compliance for Tactical Management Inc., (TMI)


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