Hierarchical Condition Category (HCC) coding is a risk adjustment model utilized primarily by the Centers for Medicare & Medicaid Services (CMS) to predict future healthcare costs for Medicare Advantage beneficiaries. This model assigns numerical values to diagnoses based on their severity and impact on resource utilization. For example, a patient diagnosed with both diabetes and associated complications, such as neuropathy, would be assigned higher risk scores compared to a patient diagnosed with diabetes alone, reflecting the anticipated higher cost of care.
This coding system is important because it promotes accurate reimbursement to healthcare providers based on the complexity and health status of their patient population. It benefits health plans by ensuring they receive adequate funding to manage the care of individuals with chronic and complex conditions. Historically, it was implemented to address concerns about adverse selection within managed care organizations, aiming to incentivize these organizations to enroll and effectively manage patients with diverse health needs. Proper utilization of this system encourages improved documentation and comprehensive patient care.
