A Hierarchical Condition Category (HCC) is defined as a risk adjustment model that is used to calculate risk scores to predict future healthcare costs. The Centers for Medicare and Medicaid Services’ (CMS) CMS-HCC model is used to predict healthcare spending for Medicare Advantage Plan enrollees. The purpose of the scoring model is to adjust capitated payments made to beneficiaries in these plans based on the member’s health. HCCs were initially implemented by CMS in 2000 and have been phased in over time. This article will focus on the CMS-HCC model.The model is based on diagnosis codes and includes 79 HCCs. Age, sex, disability, and living circumstances—such as whether the individual is living at home, in a nursing home, or in a long-term care facility—also play a part in the calculations of an HCC.

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