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How Your Hierarchical Condition Category Score Can Impact Your Wound Clinic’s Finances

Most people these days know their credit score. There are apps to help monitor it and to help improve it. The calculation may not be easy to understand and although the financial impact of a low credit score may be indirect, most people know it is real. 

Another score that affects the financial health of medical practitioners is their Hierarchical Condition Category (HCC) Score. Since 2004 the Centers for Medicare and Medicaid Services (CMS) have implemented a risk-adjustment tool that allows them to assign spending benchmarks, through the calculation of HCC scores for every beneficiary they cover. Since patients with chronic conditions tend to be higher consumers of health care dollars, CMS uses HCC scores to predict the cost of care for the following year for these beneficiaries. 

When CMS implemented Medicare Advantage (MA) plans, there was a concern that healthier patients would be cherry-picked by these plans. If all patients were assigned an average per-capita payment, then the Advantage plans would have no incentive to care for more complex patients. To minimize this risk, HCC scores for beneficiaries form the basis for higher payments based on their risk-adjusted scores. Each practitioner is assigned an HCC score, which is the average of all the HCC scores of their individual patients. The patient’s HCC score for your visit is defined by the comorbidities that are documented in your chart and transmitted when the HCFA 1500 form is sent to Medicare. It tells CMS how sick your patients tend to be, and whether the Medicare spending attributed to you makes sense in relation to the complexity of your patients’ healthcare needs.

It is becoming increasingly important to know what your HCC score is and to make sure that you accurately capture the conditions that have the most significant impact on your score. In a way, the physician’s HCC score reflects both how sick his or her patients are and how well the doctor documents these conditions in the electronic health record. For example, in a patient with a diabetic foot ulcer (DFU), comorbid conditions impact the adjustment score, such as: chronic obstructive pulmonary disease (COPD), chronic heart failure (CHF), and dialysis. However, an accidental laceration does not. As wound care and hyperbaric medicine practitioners, we treat patients with complex and serious problems. It is to our benefit to document these conditions because what diagnosis you chose has a large impact on your score. Physicians are supposed to document only the conditions that impact the care the patient is receiving. A diabetic foot ulcer may not be healing due to edema (CHF), relative hypoxia (COPD), protein malnutrition (chronic renal failure and dialysis) and peripheral vascular disease. All of these diagnoses contribute to the recalcitrance of the wound, not only the diabetes.

As a quick example, I have calculated the HCC scores for a 84-year-old male with diabetes, chronic heart failure, chronic obstructive pumonary disease, Stage IV renal failure and a Wagner grade 4 ulcer (see Table 1). Deciding what most accurately reflects the ulcer coding makes a substantial difference in the  predicted cost of care for that patient.

Documenting the Wagner 3 or 4 ulcer as chronic skin ulcer and diabetes rather than atherosclerosis with ulcer or gangrene will reduce the predicted cost by about $10,000. Considering how expensive our care can get, that will have a huge impact on how good a steward you are of patient costs. 

CMS now has extensive experience in predicting prospective costs for each beneficiary. When the Merit-based Incentive Payment System (MIPS) was implemented, one of the components of the calculation was the HCC score. Although the final calculation is murky to the general public, inevitably, the complexity of your patients’ healthcare needs will impact the bottom line in the calculation of how much of the expected resources you are using for a given beneficiary based on HCC.

You can think about your HCC score like your credit score. You can go through life ignoring it, but if your score is low because of poor data you can correct it. If you you don’t correct it, a low HCC score will ultimately have a negative effect on your finances—even if the monetary impact of the HCC is indirect and complicated. 

Helen B. Gelly is emeritus medical director of Hyperbaric Physicians of Georgia and chief executive officer of HyperbaRXs, Marietta, GA.

Editor's note: This article was originally published at It is reprinted with permission.

Helen Gelly, MD
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