Everything You Need to Know About Hierarchical Condition Category Coding


HCCs (Hierarchical Condition Categories) are collections of medical codes that correspond to specific clinical diagnoses. The Centers for Medicare and Medicaid Services (CMS) has used HCCs as part of a risk-adjustment model to identify individuals with serious acute or chronic conditions since 2004. This allows Medicare to forecast the expected risk and annual cost of care in the future.


HCC coding helps to paint a comprehensive picture of a patient’s health and complexity. It also helps to track cost performance and quality measures. Moreover, it helps to account for social determinants of health. These factors can be tracked and reported to improve cost performance and quality.

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Top-performing medical organizations are using hierarchical condition category coding best practices. These best practices include robust diagnosis coding and physician documentation of patient conditions in the EMR. However, these changes require more time and effort from providers.

HCC coding is a complex system that relies on risk adjustment models. It identifies individuals with potentially serious illnesses and assigns them a risk factor score based on their health status, age, and demographics.


HCC coding has some benefits for Medicare Advantage plans. For example, it helps to create a complete picture of a patient’s condition and may even increase reimbursements. In addition, by using this system, CMS can calculate the expected costs of Medicare Advantage beneficiaries, making it easier for healthcare organizations to decide how much to pay for services.

As the healthcare environment shifts toward value-based payment models, HCC coding has become a popular option. HCC coding uses a risk-adjustment model to predict the total cost of healthcare services for a patient. It also takes a long-term view of a patient’s health and can account for social determinants. In addition, it can track data about individual costs and patient encounters.

Although HCC coding can be an administrative burden for clinicians, the benefits of HCC coding are numerous. This type of coding captures a patient’s true clinical picture and can help identify those who are eligible for preventative care programs. HCC coding also allows health insurers to target funding based on the patient’s specific clinical needs and risks.


HCC codes, or hierarchical condition category coding, are risk-adjusted coding schemes designed to predict and estimate patient healthcare costs. HCCs consider the total costs of the care provided and the patient’s overall health. They were first used in 2004 by the Centers for Medicare and Medicaid Services and are becoming increasingly common as healthcare moves toward value-based payment models.

Hierarchical condition category coding models use diagnoses generated in patient encounters and diagnostic profiles to estimate future population costs. HCCs directly impact the amount of money that healthcare organizations receive from CMS, the largest single payer in healthcare. Patients with high HCCs are expected to need intensive medical treatment, and clinicians who enroll these high-risk patients are paid more than those with low HCCs. Organizations that do not document HCC codes correctly or, to the greatest extent possible, will not be eligible for these additional reimbursement amounts for applicable patients.



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