Hierarchical Condition Categories (HCCs) aren’t a new concept, but as more and more organizations shift to value-based care, the lack of a foundational knowledge of HCCs, could result in lower rates of reimbursement, or sometimes not getting paid at all.
Hierarchical Condition Categories, are sets of medical codes that are linked to specific clinical diagnoses.
HCCs are used by CMS as part of a risk-adjustment model that identifies individuals with serious acute or chronic conditions. This allows Medicare to project the expected risk and future annual cost of care.
A RAF, (Risk Adjustment Factor) score is a measure of the estimated cost of an individual’s care based on their disease burden and demographic information. Each HCC associated with a patient is assigned a RAF that is averaged with any other HCC code factors and a demographic score. The resulting score is the payment amount a provider receives for a patient. Healthier patients will have a below average RAF while sicker patients will have a higher one, which impacts the calculated payment amount.
The below linked HCC Tip Card is a few years old, but maybe it can help us understand how HCC is weighted.