Everything You Need to Know About the HCC Risk Adjustment Models
Everything You Need to Know About the HCC Risk Adjustment Models
Risk adjustment models are statistical methods that calculate a patient’s probable cost of medical care based on their health, age, sex, medical condition, and probability of using medical services. These models are employed by health insurance companies to determine premiums and by Medicare and Medicaid to allocate payments to health plans. HCC risk adjustment refers to a system that uses Hierarchical Condition Category (HCC) coding to estimate the expected healthcare expenses for a patient or group of patients. There are two HCC risk adjustment models: the HHS-HCC model and the CMS-HCC model.
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 uses 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). Medicare utilizes the community model to provide coverage for the majority of its 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 v28 model includes 115 HCC group categories for chronic illnesses. Share this list of the most common HCC chronic conditions with your team – fill out the form below for a downloadable resource:
Here are the most common HCC chronic conditions for Medicare patients (CMS):
- Alzheimer’s disease
- Acute Myocardial Infarction
- Amputation Status
- Anemia
- Asthma
- Atrial Fibrillation
- Cancers
- Cataracts
- Congestive Heart Failure
- Chronic Kidney Disease
- Chronic Obstructive Pulmonary Disease (COPD)
- Depression
- Diabetes
- Dialysis Status
- Glaucoma
- Hip Pelvic Fracture
- HIV Status
- Hyperlipidemia
- Benign Prostatic Hyperplasia
- Hypertension
- Hypothyroidism
- Ischemic Heart Disease
- Organ Transplant Status
- Osteoporosis
- Ostomy Status
- Rheumatoid Arthritis
- Stroke / Transient Ischemic Attack
“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, since 2020, the RAF score has integrated more encounter and inpatient data. The other 50% is determined using fee-for-service data (CMS, 2020). In 2021, the blend changed to 75% of the 2020 CMS-HCC model and 25% of the 2017 CMS-HCC model.
2022 Medicare Advantage Advance Notice Part I – Risk Adjustment | CMS
2023 CMS-HCC Risk Adjustment Model
CMS is implementing a policy to consistently apply the V28 risk adjustment model in the Shared Savings Program, meaning the same CMS-HCC risk adjustment model used in the performance year will be applied to all benchmark years when calculating prospective HCC risk scores. This policy is effective for agreement periods starting on January 1, 2024, and subsequent years, following a three-year phase-in aligned with the Medicare Advantage transition to the revised 2024 CMS-HCC risk adjustment model (V28). Specifically, for the performance year 2024, the model used will be a blend of 67% of the current 2020 CMS-HCC risk adjustment model (Version 24) and 33% of V28.
2024 Medical Advantage and Part D Rate Announcement
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.
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
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:
