The HCC System

Hierarchical Condition Category is Driven from Diagnosis ICD-9s

  • The HCC system allows the plan to enroll sicker members and allows the plan to provide better benefits.
  • Payments are now risk adjusted utilizing ICD-9s to determine Risk Adjustment Factors (RAF).
  • Cost prediction is meant to be like a commercial insurance premium to PTHP, and is meant to be enough to cover not just doctor fees, but all Hospitalizations, Tests, Procedures, DME, Drugs, Home Health Care, Skilled Care, PT, OT, Rehab, Prosthesis, etc.
Risk Adjustment Factors-how do they work
  • Each member's HCC-ICD-9 values are added together and the sum (Risk Adjustment Factor-RAF) is added to an age/sex adjustor and multiplied by a predetermined dollar amount. This reflects how much PTHP will be reimbursed to cover services provided to that member.
  • Patients who have multiple chronic diagnoses and co-morbidities in the HCC system receive higher revenue.
Risk Factor* Adjustment using HCC or ICD-9s Example:

75 year old female (age/sex factor 0.40) with chronic bronchitis (HCC value 0.38) and chronic depression (HCC value 0.431) and a base payment of $600 per month.

  • (0.40+0.38+0.431) ($600)=$726.60 monthly payment from CMS versus $600.00.

*factor value changes annually.

Providers must make sure that ICD-9 codes submitted to PrimeTime Health Plan are as complete and accurate as possible to help PrimeTime Health Plan obtain appropriate payment from CMS.
  • This allows PTHP to pay for the best care for our members/your patients.
In a “nutshell”
  • You, the physician, are paid for CPT codes
  • We, PrimeTime Health Plan, are paid for ICD-9 codes that you submit on a bill and document in a signed note in the chart.
Chronic condition ICD-9 codes must be repeatedly submitted every calendar year.

Examples: COPD, CHF, AF, DM, Parkinson’s Disease, RA.

The System is designed to predict cost of care-not how sick the member is. This may not seem logical
  • Dementia, one the most expensive diagnosis, does not have any HCC value.
  •  Uncomplicated Hypertension and Osteoarthritis, two of the most common diagnoses, do not have any HCC value.
  • Cardiac arrest has a value of 0.692. Since that patient might not be alive next year, there may not be a financial impact the following year. An amputated small toe (V49.72) has a value of 0.843. That patient may have diabetes and vascular disease and may incur significant claims the following year.


  • Each HCC or ICD-9 is counted by CMS only once per calendar year, even though we ask you to submit the diagnosis as often as appropriately attended to.
  • Each HCC or ICD-9 must be billed at least once each calendar year and supported with proper documentation.
Where does the Hierarchical component come in?

Two diagnoses may fall into two HCC categories with different risk values.

  • CMS will count the ICD-9 with the greater risk value.

Uncomplicated diabetes-HCC 19 (risk factor of 0.2) and diabetes with complication-HCC 17 (risk factor of 0.391). CMS will count only HCC 17.

There are instances when two codes triggered by the same disease will both have a risk value.

Diabetes with ophthalmologic complications (250.50-250.53) (HCC 18/0.343) and Proliferative diabetic retinopathy (362.02) (HCC 119/0.349)

  • Both will be counted for a risk value of (.343+.349) 0.692
  • Non-proliferative (mild, moderate and severe) diabetic retinopathy and diabetic macular edema do not have a separate HCC but should be coded as diabetes with ophthalmologic complications (250.50-250.53).

Last updated: 1/13/2011 12:00:00 AM
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