HCCs: Don’t Underestimate Their Importance

August 3, 2015 / By Cheryl Manchenton, RN

So there are PPCs and HACs, PPRs and PPAs, PSIs and VBP just to name a few. But please don’t forget or underestimate the importance of HCCs. Why should you care about HCCs? HCCs are Hierarchical Condition Categories (there’s a mouthful). In simpler terms, HCCs are diagnoses/conditions that are present in the patient that complicate their care and management and require more resources to treat. Sounds easy enough right?

Let’s provide a little more clarity through our patient Mr. Smith, an 80-year-old who lives at home with mild dementia and elevated cholesterol. Not too complicated, right? Maybe one physician visit per year with annual blood work. But what if Mr. Smith was instead a nursing home patient who also has CAD, hypertension and diabetes? Ahh, now the patient needs maybe 3-4 visits per year plus visits to a cardiologist, and prescriptions for his blood pressure and diabetes, diabetic testing supplies etc. The cost of his care just rose exponentially. But let’s take it a step further. What if his diabetes has associated organ involvement with impaired renal function and neuropathy? Even more medication and surveillance and probably additional consultant visits to a nephrologist and/or endocrinologist. Mr. Smith just got a lot more challenging to care for…and a lot more expensive to care for.

To understand HCCs you also have to understand spending per beneficiary: the cost incurred by the government or an insurer in caring for the patient on an annual basis. Medicare monitors this (Medicare spending per beneficiary) to ensure we as healthcare providers use our precious healthcare dollars wisely. Commercial insurers have also been monitoring our spending and excluding providers or organizations if they aren’t being fiscally prudent. So if we don’t properly document the complexity of the patients we are caring for, we appear to be overspending on their care and subjecting them to unnecessary visits, treatments and medications, etc.

Let’s now talk about HCCs. HCCs were set by CMS to reimburse Medicare Advantage Plans to cover the cost of the patients treated within their population. The sicker the patients, the more reimbursement expenses that might be incurred so the higher the per member per month payment. HCCs are measured for one year to capture all visits to providers, including inpatient, outpatient and physician office visits. These are risk-adjusted with factors such as age, sex, Medicare status and the previous year’s score to determine the appropriate payment for the care of the enrolled patients. The diagnoses are “scored” and are sorted into hierarchical categories and a patient’s risk score is then calculated. So the more thoroughly we document all conditions and the specificity of those conditions, then the higher HCC score that can be assigned for our patient and the more resources we are allotted in caring for the patient.

HCCs aren’t really new. They were originally created for Medicare Advantage plans and have now been adapted to the commercial payer market in the form of HHS-HCCs. But they are also moving into the state forum in states such as California. Additionally, a component of Value Based Purchasing is Medicare Spending per Beneficiary. So those pesky diagnoses and their specificity are becoming even more relevant.

So what is needed from us as a healthcare community? Instead of focusing just on documentation improvement, we must focus on documentation completeness. Additionally, the benchmarks we have used to measure the success of our clinical documentation improvement and coding efforts are going to need to change. Case Mix Index, secondary capture rates, etc. will be less important as we move from fee for service to pay for performance. For our hands-on providers, start documenting completely today. For our clinical documentation improvement staff, start querying more completely. For our coding staff, start coding completely. Let’s prove we are good stewards of the resources we need to care for our patients!

Cheryl Manchenton is a Senior Inpatient Consultant and Project Manager for 3M Health Information Systems.


Want to hear more from Cheryl and other experts? Click here to read about physician queries in medical charts.