Healthcare Insights
Hierarchical Condition Categories (HCCs) by CBSA
Factors such as rising healthcare costs, the prevalence of chronic health conditions, and an aging population make value-based care reimbursement models an important focus for healthcare leaders to work on managing the cost of care. Government insurance programs like Medicare have introduced programs to address this type of reimbursement, such as Diagnostic Related Groups (DRGs) and Hierarchical Condition Categories (HCCs).
What are Hierarchical Condition Categories (HCCs)?
HCCs are part of a Centers for Medicare and Medicaid Services (CMS) risk-adjustment model that helps estimate future healthcare costs for patients. HCCs are mapped to ICD-10 codes, which are then used to score patients according to risk. Additional patient demographics such as age and sex are used to assign a risk adjustment factor (RAF) score. That score helps payors and the healthcare organization better forecast the cost of care.
How are HCCs used by hospitals and health systems?
Healthcare executives use HCCs to compare patient cases and patient loads to the overall average for the entire Medicare population. The average risk score is set at 1.0, where beneficiaries scoring greater than 1.0 expect above-average spending and those scoring less than 1.0 anticipate below-average spending.
The Definitive Healthcare HospitalView product features more than 900 core-based statistical area (CBSA) Market Overviews that include HCC scores.
What is a core-based statistical area (CBSA)?
A core-based statistical area (CBSA) is a geographic region of the U.S., defined by the Office of Management and Budget (OMB) in 2000. CBSAs are micropolitan or metropolitan urbanized areas, encompassing densely populated residential, non-residential and commercial land.
Micropolitan areas have a population of 10,000 to 50,000 people in an urban cluster, while metropolitan areas have one or more urban centers and a population of at least 50,000 people.
What is an example of a core-based statistical area?
The three largest CBSAs by population are:
- 35620 New York-Newark-Jersey City NY-NJ-PA
- 31080 Los Angeles-Long Beach-Anaheim CA
- 16980 Chicago-Naperville-Elgin IL-IN-WI
In the list below, we rank CBSAs by the highest HCC expected risk scores. This data is from CMS Public Use Files and updated on an annual basis.
| Rank | CBSA ID | CBSA name | Average HCC score | Explore dataset |
|---|---|---|---|---|
| 1 | 40100 | Rio Grande City-Roma, TX | 1.53 | Explore |
| 2 | 39700 | Raymondville, TX | 1.50 | Explore |
| 3 | 32580 | McAllen-Edinburg-Mission, TX | 1.31 | Explore |
| 4 | 36380 | Okeechobee, FL | 1.30 | Explore |
| 5 | 10860 | Alice, TX | 1.29 | Explore |
| 6 | 20940 | El Centro, CA | 1.29 | Explore |
| 7 | 15180 | Brownsville-Harlingen, TX | 1.25 | Explore |
| 8 | 26140 | Homosassa Springs, FL | 1.24 | Explore |
| 9 | 33100 | Miami-Fort Lauderdale-West Palm Beach, FL | 1.22 | Explore |
| 10 | 14220 | Bogalusa, LA | 1.21 | Explore |
Fig. 1 Data is from the Definitive Healthcare HospitalView product and sourced from CMS Public Use Files (PUF). Accessed May 2023.
Which CBSAs have the highest HCC score?
Rio Grande City, Texas, in the southern part of the state, has the highest average HCC risk score among CBSAs at 1.53. Nearby, Raymondville, Texas, has the second highest HCC score at 1.50.
With 1.0 set as the benchmark HCC score, expected costs of patient care are higher for these regions. CBSAs in Texas make up four of the top five on this list. Three CBSAs in Florida also appear on the list.
Why are core-based statistical areas important?
The Definitive Healthcare HospitalView product has profiles on more than 900 CBSAs that track the CBSA population and growth, the number of healthcare facilities within it and the CBSA’s total hospital net patient revenue, which are important components in understanding and targeting these key regions across the country.
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