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For The Record
E-Newsletter    May 2023
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Editor's E-Note

Kelly Shew, RHIA, CPC, CPCO, CDEO, CPB, CPMA, CPPM, CRC, CEMC, CGIC, CPEDC, an AAPC-approved instructor, is a member of the AAPC Documentation Advisory Committee and speaks often for coding chapters locally and nationally. Here, she talks with contributor Susan Chapman about an increasingly prevalent classification system used to forecast reimbursement.

In addition to reading our e-newsletter, be sure to visit For The Record’s website at www.fortherecordmag.com. We welcome your feedback at edit@gvpub.com. Follow For The Record on Facebook and Twitter, too.

Kate Jackson, editor
In This E-Newsletter
E-News Exclusive

Hierarchical Condition Categories and Outpatient Clinical Documentation Improvement

By Susan Chapman, MA, MFA

Hierarchical condition categories (HCCs) are risk-adjusted Medicare and Medicare Advantage outpatient clinical documentation classifications used to forecast future provider reimbursement. Akin to diagnosis-related groups, or DRGs, for inpatient care, HCCs operate on the assumption that similar conditions among patients require comparable amounts of care and resources.

Each HCC has an individual value assigned to it. “We determine reimbursement by adding a value from each category for certain conditions that a patient has, combine that with demographic information like age and gender, and assign an overall patient-risk score,” explains Kelly Shew, RHIA, CPC, CPCO, CDEO, CPB, CPMA, CPPM, CRC, CEMC, CGIC, CPEDC, an AAPC-approved instructor. “As an example, the average patient in the Medicare population has a risk score of one. Healthier-than-average Medicare patients may have a rating that is less than one. If you have a sicker-than-average Medicare patient, that individual could be a little bit over one or well over one. Depending on their conditions, patients could have scores of two, three, or even into the teens. A higher score might pertain to someone like a transplant patient or someone with a number of chronic conditions. We then multiply that risk score by a dollar value to determine the capitation fee for each patient per month,” Shew says.

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