The Centers for Medicare & Medicaid Services (CMS) has launched the new risk adjustment Hierarchical Condition Category (CMS-HCC) model for 2024. The upcoming Version 28 (V28) will feature modifications to the Medicare Advantage (MA) capitation rate and risk adjustment methodology. These changes will have a significant impact on Risk Adjustment Factor (RAF) scores and the way health plans and medical providers handle patient risk and resource distribution.
The new V28 model will be a phased-in change that will be implemented over a three-year period. For the 2023 data collection year, a blended percentage of 2020 model Version 24 (V24) and V28 models will be used, with 67% of the risk score based on V24 and 33% on V28 for PY 2024. The phase-in is consistent with how CMS has implemented prior model updates.
For PY 2024 (2023 dates of service), risk scores will be calculated as a blend of 67% of the risk scores calculated with the current model (V24) and 33% of the risk scores calculated with the updated model (V28).
For PY 2025, risk scores will be calculated as a blend of 33% of the risk scores calculated with the V24 model and 67% of the risk scores calculated with the V28 model.
For PY 2026, 100% of the risk scores to be calculated with the V28 model.
Model | 2024 | 2025 | 2026 |
Current Model (V24) | 67% | 33% | 0% |
Updated Model (V28) | 33% | 67% | 100% |
The new V28 model itself includes some significant changes.
Model Reclassification and Recalibration
The new V28 model is built around the structure of ICD-10 codes and uses clinical concepts in that coding system. The V24 model was based on the outdated ICD-9-CM model. Model V28 will fully transition HCCs to ICD-10-CM, enhancing its ability to fully incorporate the specificity of the code set and to align with the rest of the healthcare system, which has been using ICD-10 since 2015. It also incorporates newer data, as the current MA risk adjustment model is calibrated with 2014 diagnosis data and 2015 FFS expenditure data. The new model will use 2018 diagnosis data and 2019 expenditure data. Most importantly, the V28 model includes clinically based adjustments to ensure that conditions included in the model are stable predictors of costs.
Increase in the number of HCC Categories
The V24 model has a total of 86 HCC categories and 9,797 ICD-10 mapped diagnosis codes. Compare that to V28 which has 115 payment HCCs with 7,770 mapped HCCs. The new HCCs are designed to capture more complete and accurate data to reflect the true health status of patients with chronic conditions. This will help health plans and medical practices better understand their patients’ health needs and provide them with the care needed to manage their conditions effectively. It will also require health plans and medical practices to update their coding practices and risk adjustment strategies, which will require a significant investment of time and resources.
| Model V24 | Model V28 |
Diagnosis Code Set | ICD-9-CM | ICD-10-CM |
Data Years Utilized | 2014-2015 | 2018-2019 |
Number of diagnoses | 9,797 | 7,770 |
Number of HCC Categories | 86 | 115 |
ICD-10 HCC Categories Deleted | | 2,236 |
ICD-10 HCC Categories Added | | 209 |
Additional Diagnosis Codes
There are several new conditions that have been added to V28 that were not included in V24. Some highlights include:
HCC Description | HCC Category |
Retinal Vein Occlusion | 298 |
Severe Persistent Asthma | 279 |
Eating Disorders (Anorexia Nervosa, Bulimia Nervosa) | 153 |
Benign Carcinoid Tumor | 22 |
Malignant Pleural Effusion | 17 |
Removed Diagnosis Codes
While some new conditions have been added to the V28 model, many that were included in V24 have also been removed. CMS made the decision to eliminate these HCCs based on the following criteria:
The conditions did not accurately predict costs
There was no “well-specified” diagnostic coding criteria
Conditions were uncommon
Coefficients were small
HCC Description | HCC Category |
Protein Calorie Malnutrition | 21 |
Endocrine Conditions to Include Parathyroid and Metabolic Diseases | 23 |
Angina Pectoris | 88 |
Alcohol and Cannabis Abuse with Intoxication | 59 |
Mild Major Depressive Disorder | 59 |
Bipolar Disorder in Current or Full Remission | 59 |
Atherosclerosis of Arteries of the Extremities | 108 |
Dialysis Status | 134 |
Acute Renal Failure | 135 |
Complications of Specified Implanted Device or Graft | 176 |
Renumbering of HCCs
Some HCCs in the V28 model have been renumbered. This reflects the increase in the number of HCCs in the V28 model as compared to the current model, as well as the splitting of existing HCCs.
Neoplasm Disease Group 2020 CMS-HCC Model (V24): 5 HCCs | Neoplasm Disease Group 2024 CMS-HCC Model (V28): 7 HCCs |
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Dual HCCs
Some conditions that previously in V24 only mapped to one HCC will now map to two in V28.
DM with nonproliferative diabetic retinopathy with macular edema (HCC 37 + 298)
Heart-lung transplant complications (HCC 221+276)
Constraining
HCC constraints hold the coefficients of the HCCs equal to each other with each HCC carrying the same weight. All coefficients are the same regardless of complication status. For example, the contribution to the RAF score from uncomplicated diabetes vs diabetes with complications will not change. Although the coefficient for diabetes without complications (E11.9) will receive a slightly higher coefficient in V28 than it currently does in V24, this is expected to be a significant reduction in the RAF score for patients with acute or chronic complications from diabetes.
Diabetes Group | Heart Disease Group |
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CMS has acknowledged that these changes could impact beneficiary risk scores, even if there is no change in the patient’s health status. CMS maintains that the new version will provide more accurate relative weights and risk scores because they are based upon more recent utilization, coding, and expenditure patterns. While the overall impact of the proposed changes on beneficiary RAF scores will depend on factors such as age, geography, and patient health status, scores in general are expected to decrease. CMS projects that the CY 2024 impact on MA risk scores are projected to decrease by 3.12%, which will translate into a $11.0 billion net savings to the Medicare Trust Fund in 2024.
As the risk adjustment industry navigates these changes the impact will be significant for MA organizations. Managing the blending of two models will create challenges. Conditions that are an HCC in one version may not be in the other. And although a diagnosis may be an HCC in both versions, the actual HCC and RAF may be different. Accurate coding, to the highest level of specificity, and complete and comprehensive medical record documentation have never been more important.
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