Everything You Need to Know About the HCC Risk Adjustment Models

Everything You Need to Know About the HCC Risk Adjustment Models

There are two models for Hierarchical Condition Category (HCC) risk adjustments. The U.S. Department of Health and Human Services (HHS) oversees the HHS-HCC risk adjustment model. This covers commercial payers of all ages and determines risk payments for the current year. In addition, the Centers for Medicare and Medicaid Services (CMS) uses the CMS-HCC risk adjustment model for the Medicare Advantage program and those who qualify for Medicare or patients 65 and older, calculating risk payments for the next year, according to the HHS-HCC Risk Adjustment Model for Individual and Small Group Markets under the Affordable Care Act – PMC (nih.gov).

Both use a risk adjustment factor (RAF) score to calculate expected future health costs for each patient. Instead of providing one base payment for every patient, the risk adjustment model allows for more accurate payments for expected costs based on every enrollee’s health status and demographics.

How does the CMS HCC Risk Adjustment Model work?

The RAF score for both models is based on a combination of demographic data and diagnoses identified by ICD-10 codes. Demographics include the person’s age, gender, and, for the CMS-HCC model, the place of residence (in a community or skilled nursing facility), and Medicare and/or Medicaid enrollment.

Furthermore, within the CMS-HCC risk adjustment model, there are two risk segments – the community model and the institutional model (Advance Notice of Methodological Changes for Calendar Year (CY) 2020 for the Medicare Advantage (MA) CMS-HCC Risk Adjustment Model). The community model is used for the majority of Medicare beneficiaries. In contrast, the institutional model covers individuals who have lived in nursing homes and assisted living facilities for an extended period.

Additionally, the CMS HCC risk adjustment V24 model includes 86 HCC group categories for chronic illnesses. Here are the most common chronic conditions for Medicare patients (Chartbook and Charts | CMS):

  • Hypertension
  • Hyperlipidemia
  • Arthritis
  • Diabetes
  • Ischemic heart disease
  • Chronic Kidney Disease
  • Depression
  • Heart Failure
  • COPD
  • Alzheimer’s / Dementia
  • Atrial Fibrillation
cms-hcc risk adjustment model 2020
Source: Karen Youmans, President and CEO, YES HIM Consulting
“Does the Documentation Meet the M.E.A.T. Criteria?” Presentation

For the CMS/HCC risk adjustment model, specialists calculate payments half by the criteria under the Payment Condition Count model, which considers the number of medical conditions for each patient; and the other half by the risk adjustment criteria. Furthermore, beginning in 2020, more encounter and inpatient data have been incorporated into the RAF score. The other 50% is determined using fee-for-service data (CMS, 2020). In 2021, the blend changes to 75% of the 2020 CMS-HCC model and 25% of the 2017 CMS-HCC model.

Announcement of Calendar Year (CY) 2021 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (cms.gov)

2022 Medicare Advantage Advance Notice Part I – Risk Adjustment | CMS

2023 CMS-HCC Risk Adjustment Model

Specificity is Critical

For the risk adjustment models to function correctly, coders must employ specificity in their HCC risk adjustment coding. Creating a complete and accurate record of each patient’s face-to-face encounter with the physician, coupled with the patient’s medical history, is a crucial part of the risk adjustment process. Additionally, to help correctly code patient diagnoses and assign RAF scores, healthcare organizations use the M.E.A.T. (monitoring, evaluation, assessment, and treatment) criteria application.

cms-hcc risk adjustment model 2020

Additionally, to review examples of how specificity impacts RAF scores and payments, read our article, “The Importance of Specificity in Documentation and Coding HCCs.” For more information about HCC coding, review our article, “Implement These Best Practices to Improve HCC Coding.”

When You Should Hire An HCC Coding Specialist

hcc risk adjustment

If the CMS risk adjustment model sounds too complicated, consider hiring an HCC RA Coding Specialist to correctly code charts, accurately identify patients’ risk scores, and help save revenue for the healthcare organization. The decision to bring in a specialist benefits not only the providers but payers and patients, too.

Finally, for more information on the CMS-HCC RA, review the CMS website.

If you manage a medical technology or software company and need HCC coding support, review our HCC Consulting Case Study. The study showcases how our team assists companies with proper documentation alignment.

Additionally, review these informative YES HIM Consulting HCC resources:

Karen Youmans

Karen G. Youmans, MPA, RHIA, CCS – President, YES HIM Consulting, Inc. AHIMA-approved ICD-10-CM/PCS trainer
cms-hcc risk adjustment model 2020

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