Back to basics: HCCs 101

April 30, 2021 / By Chris Berg, RHIA

Hierarchical Condition Categories (HCCs) have been used in the Centers for Medicare & Medicaid Services (CMS) risk adjustment payment model since 2004. That’s 17 years! More and more HIM professionals and clinical documentation integrity (CDI) specialists are reviewing patient records for HCC diagnoses. The history, the hierarchies and the importance of HCC diagnosis capture deserves a refresher.


With the Medicare Prescription Drug, Improvement and Modernization Act (MMA) enactment on December 8, 2003, the CMS-HCC model was selected as a new risk adjustment payment methodology for payments to Medicare Advantage Organizations (MAO) beginning in 2004. The CMS-HCC model includes diagnoses on professional, inpatient and outpatient claims. This model more accurately captures the risk of beneficiaries with varying health statuses and reduces the incentive for biased selection of patients in Medicare’s risk-based payment program.

The CMS-HCC risk adjustment model is prospective—it uses diagnoses in a base year, along with demographic information (age, sex, Medicaid dual eligibility, disability status) to predict medical expenditures in the next year. Just as ICD-10-CM diagnosis codes are updated yearly, so are diagnoses within HCCs. As an example, in 2018 CMS added substance abuse disorder, mental health and chronic kidney disease diagnoses to HCCs. For 2021, there are over 71,000 ICD-10-CM diagnosis codes in 86 categories for the CMS-HCC Version 24 risk adjustment model.

HCC hierarchies

HCCs reflect hierarchies among related disease categories. If a patient is diagnosed with more than one chronic condition in a hierarchy, only the highest or most severe chronic condition in the hierarchy will be reported as an HCC. A great example of this is the diagnosis of diabetes. There are three HCCs for diabetes: HCC 17 Diabetes with Acute Complications, HCC 18 Diabetes with Chronic Complications, and HCC19 Diabetes without Complications. HCC 17 is the highest category in the hierarchy for diabetes, as it includes the most clinically severe diagnoses related to diabetes. Diagnoses of Type 1 DM with ketoacidosis without coma and Type 2 DM with hypoglycemia with coma are examples of diagnoses in HCC 17.

Another example of an HCC hierarchy are diagnoses of cancer and metastatic cancer. There are five HCCs for cancer and metastatic cancer diagnoses: HCC 8 Metastatic Cancer and Acute Leukemia, HCC 9 Lung and Other Severe Cancers, HCC 10 Lymphoma and Other Cancers, HCC 11 Colorectal, Bladder and Other Cancers and HCC 12 Breast, Prostate and Other Cancers or Tumors. HCC 8 is the highest category within this hierarchy. A patient with colon cancer with metastasis to the liver will have HCC diagnoses within both HCC 11 and HCC 8, but only the diagnosis within HCC 8 for the metastasis will impact risk adjustment.

Capture of chronic conditions

An important concept of the HCC risk adjustment model is capturing a patient’s chronic conditions year over year through documentation and coding. A patient’s risk adjustment factor (RAF) score is reset to zero every January 1, so it’s essential to documenting and coding HCC diagnoses yearly to reflect an accurate health status. A patient’s diagnosis of Type 1 diabetes with peripheral vascular disease and history of below knee amputation doesn’t just go away on December 31! Not only do these diagnoses need to be captured year over year, but the provider should consider:  whether the diabetes is progressing or are there other complications of the diabetes that need to be addressed, documented and coded?

Specificity is so important for HCC diagnosis documentation! Specificity can impact whether a diagnosis is an HCC and the category to which the diagnosis is assigned. For example, major depression unspecified is not an HCC diagnosis but major depression, mild, single episode is an HCC diagnosis. Another example is a patient with dementia. If a patient with dementia has behavioral disturbances and this is documented in the record, the diagnosis will fail into a higher severity HCC. CDI specialists can educate physicians on documentation best practices including concepts of cause and effect relationships, linking complications and manifestations of a disease process and documenting “history of” diagnoses only when they no longer exist and are resolved.

Physicians can use the MEAT criteria when documenting HCC diagnoses. The acronym MEAT stands for:

              Monitor – signs, symptoms, disease progression or regression

              Evaluate – review of test results, medication effectiveness, response to treatment

              Assess – ordering tests, discussion, reviewing records, counseling

              Treat – referral, medications, planning surgery, therapies

Using MEAT criteria ensures proper documentation for HCC diagnoses and only one element of each MEAT criteria documented satisfies the documentation requirement for an HCC diagnosis. Supporting documentation of how the physician monitored, evaluated, assessed or treated the patient’s HCC diagnosis must be in the record for compliant coding.

As the American population ages and more patients become Medicare and Medicare Advantage beneficiaries, complete documentation and accurate coding are more important than ever. Capturing HCC diagnoses across the continuum of care to reflect the total disease burden of a patient population benefits the patient and provides important information for physicians, payers and CMS. CDI specialists and coders play an important part in risk-based payment methodologies by telling a patient’s accurate medical story through high quality documentation and coding.

Chris Berg, RHIA, CCS, CCDS-O, CHC is an Ambulatory Services Consultant for 3M Health Information Systems.

Learn about the impact of HCCs on your organization and the potential effect on reimbursement.