A Detailed Guide on HCC Coding: What is it Used For?

Are you ready to decode the world of HCC codes? If you’re a medical practitioner, you’ve surely heard of Hierarchical Condition Category (HCC) coding. But what exactly is it and why is it important?

In a nutshell, HCC coding is a risk adjustment model used by the Centers for Medicare & Medicaid Services (CMS) for Medicare Advantage (Part C) contract rates. It’s a system of medical codes that are linked to specific clinical diagnoses, helping CMS identify individuals with serious acute or chronic conditions and adjust payments to health plans accordingly.

But there’s more to it than just coding. Practices that participate in Medicare Advantage must report active diagnoses annually, including chronic conditions, as part of the HCC coding process. Risk adjustment scores are reset every year, making it crucial for providers to stay up-to-date with their patients’ diagnoses. The annual wellness visit is a prime opportunity to assess and report any active diagnoses.

In this blog, we’ll delve deeper into the world of HCC coding. We’ll explore its history, how it works, and why it’s important for medical practitioners. So grab a cup of coffee and get ready to expand your knowledge of HCC codes. 

The History of HCC Coding

HCC coding has gained immense significance in the healthcare industry as the shift towards value-based care models continues. The Centers for Medicare & Medicaid Services (CMS) initiated the HCC model in 2004 to establish a more accurate system for risk adjustment in healthcare.

The HCC model relies on ICD-10-CM codes to map to HCC codes, which are used to calculate risk scores[2]. These scores are then used to determine payments to healthcare providers. Practices must report active diagnoses annually, even chronic conditions, during the annual wellness visit.

The HCC model was developed by examining how demographic characteristics and health diagnoses relate to health expenditures for the population under study[3]. The model uses data elements to determine a risk adjustment factor (RAF). Although the specific data elements vary between models, the RAF is utilized to determine compensation based on underlying health conditions. 

Common HCC Codes

Hierarchical Condition Category (HCC) codes are used by insurance companies to predict the future healthcare costs of their members. Each HCC code is associated with a set of ICD-10-CM diagnosis codes that indicate the presence of a specific condition or set of conditions. The HCC codes are grouped into categories that represent different body systems and disease processes.

Some examples of HCC codes and their associated conditions include: 

  • HCC 18: Chronic obstructive pulmonary disease (COPD)
  • HCC 19: Asthma
  • HCC 27: Diabetes mellitus without complications
  • HCC 35: Hypertension with complications
  • HCC 40: Chronic kidney disease (CKD)
  • HCC 46: End-stage liver disease (ESLD)
  • HCC 85: Rheumatoid arthritis and inflammatory connective tissue disease
  • HCC 96: HIV/AIDS
  • HCC 103: Schizophrenia and other psychotic disorders
  • HCC 109: Major depressive and bipolar disorders
  • HCC 110: Anxiety disorders
  • HCC 122: Stroke

It is important to note that the specific HCC codes and associated conditions may vary depending on the version of the HCC model being used by a particular insurance company or healthcare provider. 

Why Is It Important to Use the Proper HCC Coding in Billing?

Medical coding is a vital part of healthcare billing, and using the proper coding can have a significant impact on reimbursements. In particular, Hierarchical Condition Category (HCC) coding is a complex process that requires careful attention to detail.

HCC coding is a system that Medicare and other insurance companies use to adjust payments for patients with chronic health conditions. In this system, each HCC is mapped to an ICD-10-CM code, which is used to assign risk scores to patients. The risk scores, in turn, determine the level of reimbursement that healthcare providers receive for treating those patients.

So why is it so important to use the proper HCC coding in billing? Here are a few reasons: 

  • Proper HCC coding ensures that healthcare providers are reimbursed fairly for treating patients with chronic conditions. Without accurate coding, providers may not receive the full reimbursement they deserve, which can negatively impact their ability to provide quality care.
  • HCC coding is a complex process that requires expertise and attention to detail. Using the wrong code, or failing to use all of the codes that apply to a patient, can result in inaccurate risk scores and lower reimbursements.
  • Failing to use proper HCC coding can also lead to legal issues, such as accusations of fraud or abuse. Insurance companies may investigate providers who consistently use incorrect or incomplete codes, which can result in costly fines and legal fees.

To ensure that your healthcare organization is using the proper HCC coding in billing, consider the following: 

  • Train your billing and coding staff on the proper use of HCC codes.
  • Ensure that your electronic health record (EHR) system is up-to-date and can handle HCC coding accurately.
  • Conduct regular audits of your billing and coding practices to ensure compliance with regulations and best practices.

Using the proper HCC coding in billing is essential for healthcare providers who treat patients with chronic conditions. By taking the time to learn and implement best practices in HCC coding, you can ensure that your organization is providing high-quality care while receiving fair reimbursement. 

Med Financial Can Help You Do Your HCC Medical Billing and Coding

As a healthcare provider, you understand the importance of proper HCC coding and billing. However, it can be a daunting and time-consuming task, especially when you have to handle other aspects of your practice. This is where Med Financial Solutions comes in handy.

In this section, we will explore how we can help you with your HCC coding and billing, and why you should consider working with us.

As a healthcare provider, you may have experienced the following challenges when it comes to HCC coding and billing: 

  • Lack of resources to handle HCC coding and billing in-house
  • Limited knowledge of HCC coding and billing among your staff
  • Time-consuming nature of the task, which takes away from other important tasks

Med Financial Solutions can help you overcome these challenges by offering the following services: 

  1. HCC Coding: Med Financial Solutions has a team of experienced coders who can accurately code your patients’ medical conditions and procedures, ensuring maximum reimbursement. They use the latest technology and industry standards to ensure compliance and accuracy.
  2. Billing: Med Financial Solutions can handle your entire billing process, from claim submission to follow-up on denials. They have a team of billing experts who can ensure timely and accurate payment, which improves your cash flow and reduces the risk of revenue loss.
  3. Education: Med Financial Solutions provides education and training on HCC coding and billing, which can help you and your staff understand the process better. This helps you identify any errors or issues that could lead to denied claims or underpayments, and address them proactively.


Working with Med Financial Solutions comes with numerous benefits, including:

  • Reduced workload: By outsourcing your HCC coding and billing to Med Financial Solutions, you can free up your staff’s time to focus on other important tasks. This improves efficiency and productivity, which ultimately leads to better patient care and outcomes.
  • Improved revenue: Med Financial Solutions’ accurate coding and billing processes ensure maximum reimbursement, which improves your revenue and profitability. This also reduces the risk of revenue loss due to denied claims or underpayments.
  • Compliance: Med Financial Solutions follows the latest industry standards and regulations to ensure compliance with all requirements. This reduces the risk of penalties and legal issues, which can be costly and damaging to your reputation.

Working with us can help you overcome the challenges of HCC coding and billing. So, if you’re looking for a reliable partner to handle your HCC coding and billing, request a consultation with MFS now! 

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