Introduction
The Medicare Advantage 2024 Advance Notice brings pivotal changes to the risk adjustment landscape, significantly affecting Hierarchical Condition Category (HCC) codes, disease mappings, and coefficient values. Announced on March 31, 2023, the final rule for Medicare Advantage Rate Change introduces Version 28 of the risk adjustment model, set to roll out over three years starting January 1, 2024. This update marks a notable shift from the previous Version 24, with the transition including an estimated 3.32% increase in payments to Medicare Advantage plans—an improvement from the initially proposed 1.03% increase but well below the 8% rise seen in FY2023. The new model, Version 28, aims to refine risk adjustment methodologies but presents a set of challenges for providers. In this blog, we will delve into the key modifications of CMS-HCC Version 28 explore the implications for risk adjustment, and address the potential hurdles providers may face during this significant transition.
Highlights of Version 28
Version 28 introduces several notable changes and enhancements to the risk adjustment model:
1. Enhanced Clarity with Renaming and Renumbering
Version 28 introduces a comprehensive overhaul of HCC names and numbers to improve organization and understanding.
2. Expansion of HCC Categories
The model now features 115 HCCs, up from 86 in Version 24. New additions include HCC 35 Pancreas Transplant Status, which was not included in the previous model despite the presence of the ICD-10-CM code Z94.83.
3. Reduction in ICD-10-CM Codes
Version 28 simplifies the process by cutting around 2,000 ICD-10-CM codes previously designated as HCCs, streamlining the risk adjustment framework.
4. Revised Coefficient Risk Adjustment Factors (RAF)
RAF values have been updated, with notable changes such as the chronic hepatitis RAF increasing from 0.147 in Version 24 to 0.185 in Version 28.
5. Streamlined Diabetes Categories
Diabetes-related HCCs are consolidated into a single category, which will impact how risk scores are calculated for patients with diabetes.
6. Removal of Non-Applicable Diagnosis Codes
A total of 2,294 diagnosis codes have been removed as they no longer map to a payment HCC, reducing complexity in the model. Additionally, 268 diagnosis codes have been added that did not map to a payment CMS-HCC in Version 24.
CMS-HCC Model Version 28: Details of the Changes
The CMS-HCC Model Version 28, transitioning over the next three years, represents a significant overhaul of the current risk adjustment framework. Initiated in 2020, Version 24 included 86 payment Hierarchical Condition Categories (HCCs) mapped to nearly 9,800 ICD-10 codes. The new Version 28 increases the number of HCCs to 115 but reduces the ICD-10 codes to 7,700—a 33% rise in HCC categories alongside a 21% cut in codes. This shift aims to
streamline the model and minimize discretionary categories, in line with Principle 10, which seeks to reduce coding discrepancies between Medicare Advantage (MA) and fee-for-service (FFS) systems.
The revisions are anticipated to save Medicare $11 billion in 2024. However, these changes may impact MA risk scores and potentially lower reimbursements. Recent federal audits have highlighted issues with inflated claims, with major MA plans facing scrutiny and legal challenges over coding practices. In response, CMS emphasizes the need for accurate claims to ensure compliance and financial integrity. Organizations must now reassess their claim generation processes and technology to adapt effectively to the new HCC guidelines and maintain alignment with evolving federal standards.
Differences Between V24 and V28 Risk Adjustment Models
The transition from V24 to V28 in the CMS-HCC Risk Adjustment Model marks a significant advancement. V28 introduces new diagnostic codes, removes outdated ones, and refines existing codes, ensuring more precise patient condition mapping. Key changes include reduced HCC mapping, revised mental health scoring, and enhanced model specificity, resulting in more accurate risk scores. This update promotes fairer reimbursement and better reflects patient complexity. By understanding and adapting to these refinements, healthcare organizations can ensure continued compliance and maintain equitable care standards, reinforcing the critical role of risk adjustment in healthcare reimbursement.
Understanding the Implications for Medical Coding Professionals
1. Expanded HCC Coding Requirements
The 2024 CMS-HCC model introduces 115 payment HCCs, requiring coders to achieve a higher level of specificity in their documentation to accurately reflect diverse health conditions and improve coding accuracy.
2. Importance of Continuous Education
To adapt to the new model, coders need regular training to stay up-to-date on coding guidelines and effectively translate complex patient diagnoses into the revised CMS-HCC coding framework.
3. Professional Growth for Coders
The updated model demands coders to upskill to enhance their expertise, specializing in areas of HCC documentation and compliance.
4. Customized Training Programs by SMEs
Risk adjustment vendors will need to develop tailored HCC training programs. Subject matter experts can help hospitals equip their coding teams with the knowledge needed to navigate changes and ensure compliance with new requirements.
5. Risk Reduction and Compliance Improvement
Tailored training programs minimize compliance risks by ensuring coding accuracy, reducing potential audit issues, and aligning coding practices with regulatory standards to maintain a hospital’s coding integrity and readiness.
The Road Ahead for Risk Adjustment Solution Providers
The implementation of CMS-HCC Model V28 is just the beginning of ongoing changes in the risk adjustment space. Solution providers that proactively adapt their offerings will be better positioned to support clinicians, coders, and healthcare organizations. Flexibility, innovation, and deep knowledge of CMS guidelines will be the defining traits of successful risk adjustment vendors in the V28 landscape. Ultimately, the providers that can simplify the complexities of this new model while ensuring compliance and accurate coding will become invaluable partners in healthcare organizations' journey to maintain optimal reimbursement and patient care.
Adapting to the Changes: A Practical Approach
How Vendors Can Adapt to These Challenges
1. Adapting to Plan Contract Changes
One of the key factors influencing the impact of CMS-HCC Model V28 on a given provider group is the specific plans they contract with. Each Medicare Advantage plan may be affected differently by the new model, requiring solution providers to offer tailored services. Vendors must stay updated with plan-specific changes and customize their tools to meet the varying needs of healthcare organizations. This could include creating flexible solutions that can adjust to different plan requirements, ensuring that clinicians and coders can continue to assess patient risk accurately without interruption.
2. Addressing Population-Specific Diagnosis Challenges
The revised risk adjustment model impacts diagnoses and HCCs based on individual patient populations. For risk adjustment solution providers, this creates the need to develop more sophisticated algorithms and predictive tools that can help healthcare organizations account for the nuances of their patient demographics. As certain diagnoses may receive a higher or lower weight under Model V28, providers will rely on solution vendors to offer insights into how these changes affect their risk scores. Vendors that can offer tools with advanced analytics capabilities will have a significant advantage in helping healthcare organizations maintain accurate risk assessments.
3. Supporting Historical Coding Practice Adjustments
Historically, many providers have developed specific coding practices that align with previous CMS-HCC models. However, the introduction of Model V28 may expose inefficiencies or outdated practices. Risk adjustment solution providers must offer comprehensive audit tools and retrospective review features that help providers identify areas for improvement in their coding processes. By supporting these historical adjustments, solution vendors can ensure providers remain compliant with the updated model while optimizing their risk capture efforts. Vendors that can facilitate smooth transitions in coding practices will be critical in preventing disruptions in the revenue
cycle for healthcare organizations.
4. Invest in Advanced Analytics and Technology
Adopting advanced data analytics tools and refining AI and NLP technologies will be crucial for vendors as they face more complex coding requirements. These technologies can help streamline operations, increase accuracy, and adapt faster to CMS updates. Vendors should focus on building flexible platforms that can accommodate rapid model updates and recalibrations.
5. Prioritize Comprehensive Staff Training
Investing in continuous education for coding professionals is essential. Coders need to be equipped to handle the increased specificity in diagnosis codes while navigating the nuances of chronic condition updates. On-the-job training, webinars, and collaboration with subject matter experts will enhance their ability to adapt to V28.
6. Collaborate with Clients on Risk Management
For risk adjustment vendors, partnerships with clients are critical to successful adaptation. Vendors must work closely with MA organizations to ensure their risk adjustment strategies align with the latest CMS guidelines. This could involve regular feedback loops, data-sharing initiatives, and proactive planning to mitigate any potential
financial or compliance risks.
7. Focus on Compliance Audits and Quality Assurance
Staying ahead of CMS audits and regulatory reviews is key. Vendors should incorporate robust quality assurance programs to monitor compliance with the V28 model. Regular internal audits and risk assessments can prevent issues before they arise and protect vendors clients from financial repercussions.
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Conclusion: Navigating the Future of Risk Adjustment with CMS-HCC V28
CMS-HCC Model V28 brings new challenges that risk adjustment vendors must address through adaptability, advanced technology, and robust workforce training. By refining their processes to meet the increased complexity of coding, recalibrated risk scores, and evolving CMS priorities, vendors can continue to provide accurate, compliant, and effective solutions. In this ever-changing landscape, those who invest in cutting-edge technologies, upskill their teams, and proactively engage with clients will be well-positioned to succeed.
