HCC coding: What’s the big deal?

June 18th, 2018 / By Karla VonEschen, CPC

A hot topic in health care today is Hierarchical Condition Categories (HCCs). At the last local AAPC chapter meeting I attended, we had a guest speaker who discussed HCCs in great detail and I found it fascinating. For all you coders, who hasn’t seen something about HCC coding? Whether you follow coding groups on Facebook or just follow healthcare news, HCCs are everywhere and coders are in great demand to audit medical records from an HCC perspective. So, why is this such a big deal and why are coders essential to HCC success? Read on!

What are HCCs? In very simple terms, HCCs are a methodology first used by CMS to help predict costs for treating Medicare Advantage patients in inpatient, outpatient and office settings. Patient demographics and diagnosis coding are used to determine risk adjustment and how much money will be allocated to a health plan for future patient treatment. Using the CMS HCCs as a starting point, the U.S. Department of Health and Human Services (HHS) then developed a broader HCC methodology for commercial payers and now CMS uses HCCs when calculating the total performance score under the Hospital Value-Based Purchasing Program.

As coders, we are tasked with accurate coding for HCCs, but also performing post audits which is one reason why good coders are in great demand for health plans today. Correct diagnosis coding is always important, but it is crucial for accurate risk adjustment which drives the most appropriate reimbursement for physician services. This is big for medical coders!

For HCCs, conditions and diseases are organized into body systems and similar disease process. Here are some of the top categories:

  • Asthma and pulmonary disease
  • Breast and prostate cancer
  • Colorectal, breast, and kidney
  • Congestive heart failure
  • Depression and bipolar disorders
  • Diabetes
  • Rheumatoid arthritis

We can’t forget about physician documentation when talking about HCCs. For accurate coding, documentation must be complete and specific based on a face-to-face encounter with the patient. This means it is not enough to just look at test results or patient medical history to make the diagnosis determination.  If documentation is complete, it’s up to the coder to apply the correct diagnosis code. If documentation is incomplete, physician education should be done (for further documentation guidance, see Kelly Long’s blog “M.E.A.T is even better when well done”).

By now, it should be clear why HCCs are such a hot topic. Medical coders have always been valuable, but they have become integral to the HCC coding and auditing process. We are responsible for correct coding to predict future financial resources for patients and ensure appropriate reimbursement for our physicians, so HCCs are a big deal!

Karla Voneschen is a coding analyst at 3M Health Information Systems.


Learn more about Hierarchical Condition Categories and how they can help predict the cost of high-risk patients.