HCC code and RAF score review are essential for risk adjustment. CMS-Hierarchical Condition Categories (CMS-HCC) is a risk adjustment model used by the Centers for Medicare & Medicaid Services (CMS) in the United States. It is used for payment adjustment. However, as the healthcare landscape evolves, developments can also be seen in CMS/HCC. Hence, CMS-HCC Model V28 is set to transition fully by 2025. It introduces substantial changes in risk adjustment and reimbursement methodologies. This blog will provide you with brief insights into the CMS-HCC Model V28.
Key Components of CMS-HCC
Risk Adjustment Model
CMS/HCC is a risk adjustment model designed to account for the variations in the health status of Medicare beneficiaries.
The model uses diagnostic information from medical claims and encounters to assess beneficiaries’ health conditions.
Hierarchical Condition Categories (HCCs)
HCCs are groups of related medical conditions that predict patients’ future healthcare costs. Each HCC has an associated weight or coefficient that reflects the expected cost of care for a beneficiary with that condition.
Conditions are categorized hierarchically, meaning that more severe or complex conditions precede less severe ones.
The risk score for an individual beneficiary is calculated based on the HCCs associated with their diagnosed conditions. The sum of the weights of the HCCs provides the overall risk score for the beneficiary. Higher risk scores indicate a higher predicted cost of care for that individual.
The risk scores derived from the CMS/HCC model are used to adjust payments to Medicare Advantage plans. MA plans with beneficiaries who have higher risk scores receive higher payments from CMS, reflecting the anticipated higher costs associated with managing individuals with more complex health needs.
Significance of CMS-HCC
Fairness and Accuracy: CMS/HCC promotes fairness by adjusting payments based on the health status of beneficiaries, ensuring that plans caring for sicker or more vulnerable populations receive adequate compensation.
Encouraging Comprehensive Care: The risk adjustment model encourages Medicare Advantage plans to enroll and provide comprehensive care for individuals with chronic or high-risk health conditions.
Preventing Cherry-Picking: CMS/HCC prevents Medicare Advantage from selectively enrolling healthier individuals to maximize profits. It facilitates the payment adjustment as per the health risk of beneficiaries.
Supports Risk Management: CMS-HCC assists MA plans in effective risk management by systematically assessing and predicting healthcare costs associated with different health conditions. Plans can strategically allocate resources and design care programs to manage the health of their beneficiaries efficiently.
Fair Payment Distribution: CMS-HCC is designed to enable fair and equitable payments to Medicare Advantage plans based on the health risks of their enrolled beneficiaries. By adjusting payments according to the health status of individuals, the model helps prevent overpayment or underpayment, promoting financial fairness among MA plans.
Decoding CMS-HCC Model V28: A New Version of CMS-HCC
This model is more refined and encompasses extended numbers of HCCs, i.e., from 86 to 115. There are modifications in ICD-10-CM to HCC mapping and adjustments in coefficient values. These changes are established on updated fee-for-service data. This model’s purpose is to reflect current utilizations, coding, and expenditure patterns comprehensively. Furthermore, it is expected that the V28 model will reduce Medicare Advantage risk scores by 3-8%. It helps translate substantial changes in revenue and strategic planning. Look at some of the significant points linked to CMS-HCC model V28.
Impact of V28 on RAF Scores: This V28 model uses a constraining process where associated HCCs are given the same coefficients. This could minimize RAF scores for many patients, especially those with chronic conditions like diabetes.
How Will Technology Help Streamline Health Plans?
Model V28 provides health plans with the chance for strategic planning. AI, ML, NLP, and knowledge graph technologies are significant in assisting health plans in this transition. The incorporation of these technologies aids in the following:-
- Accurate risk assessment and compliance with regulatory necessities
- Actively plan for forecasting modifications in revenue and risk scores
- Reduce operational issues and maintain focus on patient care and value-based partnerships
- Earn a competitive edge by adapting early to the new model’s requirements
CMS/HCC is a critical tool for risk adjustment in the Medicare Advantage program, aligning payments with the health needs of beneficiaries and supporting the delivery of quality and comprehensive healthcare services. The CMS-HCC Model V28 brings forth pivotal modifications in the landscape of risk adjustment, with significant implications for health plans. The use of new-age technology, such as AI, ML, NLP, and knowledge graph, enables to effectively adapt to this model.