Medicare HCC model was developed to use current year diagnoses and demographics predict current year healthcare expenditure. This classification has been used for additional risk adjustment models. ICD codes are first assigned to numeric Condition Categories ('CCs'). A hierarchy rule is then applied so that each patient is coded for only the most severe of the Condition Categories in a group. For example, if a patient has metastatic lung cancer, they will only be assigned the 'CC' for "Metastatic Cancer and Acute Leukemia", and will not be assigned the 'CC' for "Lung and other Severe Cancers". Once the hierarchy rules are applied, the codes are referred to as HCCs. This mapping can change over time. It remained the same from 2007-10
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Pope, Gregory C., et al. "Diagnostic cost group hierarchical condition category models for Medicare risk adjustment." Health Economics Research, Inc. Waltham, MA (2000). https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/Pope_2000_2.pdf
Risk Adjustment, Centers for Medicare and Medicaid Services https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors.html
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