The transition from Risk Adjustment Model V24 to V28, effective January 1, 2024, brings significant changes that will impact Medicare Advantage Organizations (MAOs) and their risk scores. CMS finalized the HCC model V28 and will begin to phase out the V24 model in 2024. V28 reflects the detail and specificity of ICD-10-CM, which has been used since 2015. The new model will be phased in over three years, with a blend of 33% for the V28 model and 67% for the V24 model for 2023 dates of service. V28 will be used at 67% for 2024 dates of service and fully phased in at 100% for 2025.
HCC model V28 will require even greater specificity in documentation and code assignment to ensure that the accurate level of your Medicare Advantage patients’ illness severity is captured. Many of us spent Q2- Q4 acclimating to the changes and teaching others, so they were prepared on January 1, 2024.
What is HCC/Risk Adjustment Factors
Hierarchical Condition Categories (HCC) are a group of similar medical diagnosis codes linked together in various risk adjustment models. You don’t hear HCC without hearing the term risk adjustment. Risk adjustment explains what HCC does within the various models and identifies patients/members with severe acute and chronic conditions. This allows the Centers for Medicare and Medicaid Services (CMS) to project the expected risk of the patient and the future annual cost to care for them. Each HCC represents diagnoses with similar clinical complexity, and the higher categories represent a higher predicted healthcare cost for the following year.
HCCs calculate payments to healthcare organizations for patients insured by Medicare Advantage (MA) plans, Accountable Care Organizations (ACOs), and commercial payers. Providers and their coding professionals add HCCs to a patient’s medical record and give documentation on the service date. Providers should be educated on HCC/Risk adjustment, their documentation’s impact on patients’ care, and projected payment in the following year.
Risk Adjustment is a modern methodology that uses diagnosis codes to determine potential patient-level risks; the model compares levels of wellness among patients and groups. A Risk score represents the predicted cost of treating a specific patient or group of patients compared to the average Medicare patient based on specific characteristics and health conditions.
The HCC RAF is calculated using the total score of all relative factors related to the patient in a year. Risk adjustment models have many variations, but all programs collect diagnosis codes according to proper coding guidelines. Additional elements/factors are taken into consideration for the patients include the following:
- Socioeconomic Status
- Disability status
- Insurance Status (Medicare, Medicaid, Dual Eligible, etc.)
- Claims data elements such as procedure codes, place of services, etc.
- Special patient-specific conditions (Hospice or ESRD patients)
What Are the Differences Between V24 and V28:
- Re-numbering and changing HCC categories
- An increase in HCCs from 86 in model V24 to 115 in model V28
- Removal of 2,294 ICD-10-CM codes that no longer map to an HCC
- Significant diagnoses removed from model V28 include:
- Acute kidney failure
- Angina pectoris
- Atherosclerosis of the extremities (PVD)
- Protein calorie malnutrition
- Amputation of toe
- 268 new diagnosis codes mapped to HCCs
- Anorexia nervosa, bulimia nervosa
- Severe, persistent asthma
- Malignant pleural effusion
- Alcoholic hepatitis with and without ascites
- Toxic liver disease with hepatitis
- Primary sclerosing cholangitis
- Other cholangitis
- Obstruction of the bile duct
- Malignant ascites
- V28 is based on more recent data (2018-2019), reflecting changes in utilization, coding, and expenditure trends.
- This recalibration results in a projected 3.12% decrease in average risk scores by 2025.
- This translates to substantial net savings for the Medicare Trust Fund, estimated at $11.0 billion in 2024.
Reduced HCC Mapping:
- V28 removes 2,294 ICD-10-CM codes previously linked to HCCs but no longer considered valid risk indicators.
- This reduction in mappable codes is intended to improve the accuracy and specificity of risk scores.
- MAOs must review their coding practices and ensure they use the updated V28 mappings.
Revised Mental Health Scoring:
- V28 eliminates risk score weighting for all mental health diagnoses under HCCs (55 and 59).
- This change acknowledges the potential for overestimating risk associated with mental health conditions.
- MAOs need to adjust their risk score calculations accordingly.
Improved Model Specificity:
- V28 introduces additional refinements to the model, including:
- Improved coding specificity to reduce misclassification of diagnoses.
- Increased emphasis on diagnoses with higher cost implications.
- Enhanced identification of chronic conditions requiring ongoing management.
- The changes in V28 are expected to have a significant impact on MAOs, including:
- Reduced risk scores and potentially lower reimbursement.
- Increased need for accurate coding practices and data analysis.
- Potential changes in member selection and care management strategies.
MAOs will need to understand the changes in V28 and take the necessary steps to adapt their operations. This includes reviewing the updated coding guidelines, implementing revised risk score calculations, and potentially adjusting care management strategies. By doing so, MAOs can ensure accurate reimbursement and maintain high-quality care for their members.
It is essential to have a consulting firm like KW Advanced Consulting come in and train, educate and review your documentation to ensure compliance with the transition from the V24 to the V28 model, as well as correct coding under the new model to ensure your organization receives appropriate reimbursements for the care you provide. Comprehensive training empowers your team to accurately identify and capture all relevant diagnoses, minimizing the risk of audits and potential penalties. We work collaboratively with your team to achieve long-term compliance success, fostering a culture of continuous learning and improvement.
If you want to learn more about the V24 and V28 models or become a certified risk adjustment coder, KW Advanced Consulting teaches the CRC virtually. There is no better time to take your career to the next level. As many organizations move to value-based, they continue to invest in hiring risk adjustment coders as a part of their teams to ensure accurate reporting of diagnosis codes.
To schedule training for your organization or private practice providers or schedule a chart review, email us today at firstname.lastname@example.org or visit the website and fill out the “contact us” form.
- CMS RAM v28 website: https://www.cms.gov/medicare/payment/medicare-advantage-rates-statistics/risk-adjustment
- KW Advanced Consulting blog post: https://kwadvancedconsulting.com/what-are-hierarchical-condition-categories/