HCC 101: CMS vs. HHS Hierarchical Condition Categories

HCCs are important for reimbursement – but what differentiates a CMS HCC from an HHS one? Here are the basics.

In healthcare, many are familiar with Hierarchical Condition Categories (HCCs) and the important role they play in the reimbursement process. However, it’s not always easy to understand the differences between the HCCs used by the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS). We’re taking a look at the similarities and differences between these two methodologies below:

Who uses CMS or HHS HCCs?

CMS HCCs are used to calculate risk-adjusted reimbursement rates for patients enrolled in Medicare and Medicare Advantage programs. HHS uses a different set of HCCs to determine risk-adjustment reimbursement rates for those with insurance plans on the Affordable Care Act (ACA) marketplace.

Need an HCC refresher? Click here to brush up on the basics.

Are there any similarities in the two HCC types?

Yes. Both sets of HCCs are used to provide risk-adjusted payments for patients with more complex care needs.

What are the major differences between the HCCs?

CMS’ HCCs are used for Medicare and Medicare Advantage patients, which means they were developed for patients over 65 and those who have disabilities. Since HHS’ HCCs cover all patients on ACA plans, the diagnosis list covers a much wider patient population than the CMS list.

What types of things are included in the HHS HCC list, but not the CMS one?

HHS’ HCC list includes categories for infants, children, all adults, and obstetrical care. The HHS coverage also includes drug costs in their HCC list. The CMS HCC policy does not assign risk values to pediatrics or obstetric codes.

Are rates for both HCC programs determined in the same way?

No. CMS uses the current year’s diagnoses to determine next year’s reimbursement rates. HHS sets rates for the current year concurrently – meaning that coverage for the current year is based on diagnoses and care for that same year.

When does each program update their HCC list?

Updates to the HCC lists for both programs are published in early April.


To learn more about ways to improve HCC capture, watch our on-demand webinar, How to better identify HCCs in the EHR.

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