Accountable Care Organization

Episode 50: Uncovering the Mysteries of HCCs

July 2023

In the world of value-based care, there’s one set of diagnosis codes that carry much greater weight than all the rest: HCCs. What are HCCs and why are they so important? Scott Williams, MD, joins Heather and Mike with the answers.

Heather: This is BACON, brief news from the MaineHealth Accountable Care Organization, a monthly podcast for health care providers. I'm Heather Ward.

Mike: And I'm Mike Clark. Heather and I are practicing physicians who participate in the MaineHealth ACO.

Heather: In this episode, we are joined by Scott Williams, a physician who can help us uncover the secrets of a uniquely powerful subspecies of clinical documentation: the HCC.

Mike: Ah yes, the HCC. I have come across these creatures in the wild many a time and Heather can even tell you what HCC stands for.

Heather: Really? Yep. That's impressive. Why don't we hold that secret bit of knowledge for our discussion?

Mike: All right, then. All right, let's cue the transition music.

Heather: Okay, Mike, let's level, set and start our conversation with the definition of HCC.

Mike: Okay, so, Heather, roughly speaking, HCCs are a set of ICD ten diagnosis codes that the Centers for Medicare and Medicaid Services uses to assess the complexity of a patient, sometimes known as their burden of illness. HCCs are a big factor in setting the financial benchmarks for the risk-based contracts that are central to value based care and HCCs stands for wait for it: hierarchical condition category.

Heather: Okay, it's not only hard to pronounce, we are already sounding like pretty obscure and complicated. So, how about we bring in a local expert to get to the bottom of HCCs and why they are important?

Mike: An excellent idea, Heather. Joining us now is Dr. Scott Williams, the burden of illness medical director for the MaineHealth Medical Group. Scott leads the work to improve clinical documentation for the BiHiVe Partnership, a joint project of MaineHealth and agilon Health to expand the benefits of value-based care to more MaineHealth patients. Welcome, Scott.

Scott: Thanks, Mike and Heather. Nice to be with you today.

Heather: It's great to have you here. Thank you so much for joining us. So you heard Mike's quick definition of HCCs. What did you think of it and what do you want to add to it?

Scott: I think, first off, excellent pronunciation, hierarchical condition category. Quite the mouthful there. I pretty much stumble over it 50 to 75% of the time myself. But your definition beyond that I think was really great, Mike. And you know, to build on it just a little bit more background on it, like you mentioned, it's a big element of what CMS does to try and shift us into value-based care and thinking about the whole burden of illness of the patient. What is what is their acuity? What is their medical burden? They put it in place back in 2004 to really launch into these measures. And it's actually it's one element of several factors that the HCC, is one element of several factors that they bring in to try and capture the burden of illness of the patient. It also happens to be the one that's the most kind of in control of the physician and the patient to effect. You know, because the other elements, they're more demographic elements, they're age, gender, their disability status. Are they eligible for Medicare or Medicaid or MaineCare? But then the big thing, that we really as clinicians are diving into is: what are their HCC conditions? What are those chronic conditions that they have going forward that are going to really drive both their health care utilization and from that the costs and quality associated with providing that care to those patients.

Heather: So based on what you're saying, just to recap here, it sounds like HCCs are really important in value-based care because they reveal how sick a patient is to payers like Medicare. And this represents their burden of illness. This also is a good sign for us as providers to be able to see like really truly what the medical conditions are of our patient. So if it's somebody I don't really know, I can look at their problem list and say like, "Oh wow, look at all these things that are going on with this patient." Must be potentially a little bit more complicated than just plain old diabetes. No other issues. But can you get into a little bit more like why this is important? The burden of illness is important in the context of value based care. Like, how do those two things go together?

Scott: I'd like to think of this a bit in like you have your individual patient, like the burden of illness thing I just talked through there. It's pretty simple. Provider and patient see each other and they walk away knowing what the conditions are, what the burden of illness is and what the plan is to manage them on a going forward basis. At the individual level, that does sound really simple. But as a health system, that's like MaineHealth, we're tasked with taking care of the individual patient themselves, but we also need to take care of the population as a whole. And so, I think of it as very important about understanding the financial aspects of what it means to take care of a full population and also like what are the quality and performance benchmarks that you're going to try and build your clinical care processes and teams around. So, you know, each individual diagnosis on its own probably has some set of straightforward path of how you're going to manage it. But when you start thinking about Maine Health as a group like MaineHealth primary care, reaches across the entire state and even into New Hampshire, and it's thousands upon thousands of people being taken care of. Really what getting very accurate about what HCC conditions, what burden of illness our patients have it once we go through and we accumulate that all together, we really start to understand what are the expectations of, you know, based on actuarial data of past cost data, how much do we need to set aside to take care of these people? And also, how do we then go about designing a clinical care, clinical systems programs, hiring staff, figuring out resources we need appropriately, so that we look back and we said, okay, these were high cost, high morbidity, you know, high utilization diagnoses in the past in the fee-for-service model, how can we get more efficient? How can we do better? What do we need to redesign how we're thinking about the care of these patients as a population as a whole? The burden of illness, you really got to think about it two ways:

Scott: The really micro level at the individual patient, that's the provider and the patient seeing each other. But then you really got to step back and think about it from more of a health system perspective of how do we design care across the state, across the health system that's going to be better than what we did in the past and how do we fund that accurately?

Mike: So, Scott, as we talk about HCCs, the other term that comes up a lot is RAF Score, right? Risk adjustment factor score. How do we think about RAF scores as we're taking care of our patients and how does that flow up into this work of representing the burden of illness in a value-based contract?

Scott: Yeah. So the RAF score is an interesting concept to get your head around. You'll remember like earlier, we were talking about how HCCs are one component of how you go into figuring out like the financial aspects and what it's going to take to be predicted to take care of this patient over the course of the next year. Remember, there were demographic factors: the age, the gender, where they live. Also, the clinical factors, the HCC conditions. And when you combine all of those things together, you know, those are the things that go into making up the RAF score: The risk adjustment factor. And then it's actually like fairly straightforward math there for a very what is actually a very complex problem, which is health care. You take that risk adjustment factor that RAF score, CMS will take it from there and they will determine what are the financial benchmarks like, how much money should a patient with this type of RAF score this number of RAF score? How much is it expected to take care of them this year? And then they'll use that money, they'll use that number and that expectation, to determine how much money they are going to give you, the insurance company, the health system as the health group as a whole to manage that patient.

Scott: One way that you think about it a lot: So, there's degrees of value-based care and risk adjustment. If the agilon and MaineHealth Partnership, the BiHiVe, is in its purest form of really thinking about true value-based care and full risk, full risk is the term you'll hear brought here where they'll take that score for each individual patient that is covered within the BiHiVe Partnership. And then they will take that score and accumulate it all together. And then they will say: "All right, MaineHealth and agilon Health, we think your cumulative score for all your patients based on the demographics, information and the burden of illness that you've portrayed them to us, we think it will cost this much money over the next year for you to take care of them." If you're in a full risk situation, it is your job to, if you want to stay in business as a health system and you want to stay in business as a provider, it's your job to figure out how to keep costs below that total amount of money that they're paying you to take care of those patients.

Scott: And so that's really like truly your financial benchmark. If you figure out how to provide high quality, cost effective care, you do it for that entire population of patients. Hopefully the outcome then is that you come in under that expected cost of care and then you can reinvest that money, that excess, into future clinical care. If you're not as efficient, you don't meet your financial benchmark there, you actually at the point where you lose money. You had to pay for the full cost of care of that patient. And any money that's in excess beyond what CMS expects out of their RAF score, you are going to be paying that out of your pocket as a health system to provide that care to that patient. So, it's really, really important to understand their RAF score and have it be as truly accurate as possible. You know, no more but no less of really, truly representing each individual patient's burden of illness, so that when you accumulate as a whole group, you can then understand how to go out and what revenue you will have to go out and design care and provide care for that group of patients.

Heather: Scott, thank you for that. That was really a lot of information. So let me just see if I can kind of put it together. HCCs are ICD ten codes that are used to help derive a RAF score. The RAF score is a representation of how sick a patient population potentially is, and it's used to help determine the financial benchmark in value-based contracts. To succeed in one of these contracts and not lose a lot of money, costs need to be kept under this benchmark and a key to making sure that the RAF score is accurate and that the benchmark is set correctly, is to use the HCC codes to precisely express the level of illness in any given patient.

Scott: I think that's a great summary, Heather. We want to get the HCC codes to match the patient. No more, no less.

Heather: Okay. So, on that note then, what can we as providers do to really ensure that the appropriate HCCs are included in the diagnoses?

Scott: So, this might sound really basic and kind of silly how simple it is, but you got to see your patients on a yearly basis. If you don't see your patients, you can't know what their burden of illness is. It's as simple as that. So step one: get your patient scheduled to be seen. It's very, it's surprisingly easy to overlook that aspect of it. Once you have them scheduled, ideally for most patients, you're going to want to have it be in some sort of visit where you can be comprehensive. At MaineHealth, we're really anchoring around the annual wellness visit or a complete physical exam, you know, that we really view that as an extended visit where good time to take a very like holistic view of the patient, really go back, try and understand, okay, what's your current state? And then where are we going in the future with you? So it's a great opportunity to go through and just name as specifically and accurately and again, no more, no less, what their conditions are. From there, hopefully it all works out. There are going to be patients, though, that they're pretty complex. They have a very high burden of illness. And that might even though you're doing a comprehensive visit, like an annual wellness or a complete physical exam, it might be a little much too reasonably for you and the patient to bite off all of that in one visit, even if it is an annual wellness visit, a complete physical exam. So, think about the year holistically.

Scott: There are people that you have a pretty good sense they have a high burden of illness. Try and see them early, get to as much as you can early in the year and then use that visit, even though maybe you don't get to everything, kind of set the groundwork for what the rest of the year is going to be like for them. Figure out when do I need to see you again? Because there's a couple of things, you know, outlining here that are either haven't been named as specifically and accurately as they can, and I'd like to sort of dig in deeper or we've named them specifically and accurately, but like they're not they're not as well controlled as you and I would like. And so we need to periodically get get back together and work together on this. And so it does require a bit of thinking and planning. And, you know, it's an interesting concept of like really thinking through how you're going to manage longitudinally rather than like just sort of bringing patients in as you can, like wherever there's access, just get them in. You know, it really shifts the way you're thinking about it. The other thing, too, is it's a lot of work. So lean in on a care team. You know, we're starting to build processes and teams around this work. It requires, you know, operational and clinical teams, MA's, nurses, we're bringing in pharmacists now and trying to expand the use of their care throughout the health system. Palliative care program is emerging as a priority. It's not your work alone, but you're as the PCP, you're the quarterback, you're guiding them to the right resources.

Scott: And then on top of that, even all of that, what I've said, you know, we do have some point of care tools that we try and put out in front of people. Some are a little archaic, like the paper member information profile. Yes, we have an electronic health record, but we're still working on paper. That's okay. We'll get there. There's also point of care tools within the electronic health record itself that can help sort of remind, prompt or even alert you to conditions that you may have been aware of with your patient in the past. But, you know, they seem to have gone unattended to for a period of time or they may also alert you like to conditions that were there, but nobody's really put a name to and started a management plan around. Sometimes people have like pretty complex medical paths. They go to an emergency room because they had left hip pain, in the process they got an EKG done and it showed AFib. The ED really focused on their hip. That's what they were there for, the AFib or whatever, you know, sort of incidental thing. Everybody might have had good intentions of getting it followed up on, but it sort of wasn't the most pressing thing at the time, and it just kind of got lost in the mix. So, you know, trying to bring in information to make it easier for provider and patient to be as thorough, as comprehensive, but also as like accurate. Again, no more, no less.

Heather: All right, Scott, thank you so much. I appreciate your time and being here. We really gained a lot of fantastic information and help us understand this process.

Mike: Thank you so much for joining us. You, your insight and your clear presentation has really helped shed some light on a really complex topic.

Scott: Thank you, Heather and Mike. It's always a pleasure talking to the two of you.

Heather: Thanks for listening to BACON this month. You can find all our episodes on your podcast app and at our web page, And if you have questions, comments or suggestions, we'd love to hear from you. Please email us at That's

Mike: BACON is produced by the MaineHealth Accountable Care Organization. Thanks for joining us. We'll see you next time.

Heather: See you next time.