HCC Re-Structuring Coming Soon!

by  Christine Woolstenhulme, QMC QCC CMCS CPC CMRS
Mar 15th, 2023

A restructure of Hierarchical Condition Categories (HCC) codes has been long overdue but get ready; it is coming to your door soon. The new HCC model V28 for FY 2024, soon to be released, will replace V24. Risk adjusting is not a new concept as we know.  In fact, Medicare started using HCCs in 2004 by linking specific ICD-9 codes to HCC groupings of clinical related conditions.  They were able to identify high-risk patients, we will go into more detail in this article as well as some of the changes to expect for with V28.

What are HCCs?
CMS uses HCCs to identify individuals with chronic or acute medical conditions to estimate future healthcare costs. HCCs are assigned a weight used to predict a risk score associated with a specific condition(s). This is accomplished by assigning diagnosis codes to HCC groups and adding patient demographics such as age and gender. Each HCC code is assigned a number representing a score or the weight of the condition.

What is a RAF Score?
Using the score assigned to the HCC, demographic factors, and whether a patient lives in the common population or an institution gives us what is called a Risk Adjustment Factor (RAF) score. A patient may have several conditions assigned to a risk score, however, not all ICD-10-CM codes map to an HCC code.  HCCs are only used to track serious, chronic, and acute conditions. This information is then reported to Medicare by a qualified health professional at least once each calendar year and each year after as long as the condition exists. Medicare then uses this information to modify capitated payments for their beneficiaries.

A higher risk score implies a more significant disease risk costing the government more money, whereas a lower risk score indicates a healthier population. Using risk scores helps plan for future healthcare costs. 

How CMS defines capitation and risk scores:

• Capitation: A way of paying health care providers or organizations in which they receive a predictable, upfront, set amount of money to cover the predicted cost of all or some of the health care services for a specific patient over a certain period of time. 
   
• Risk Score: A number representing the predicted cost of treating a specific patient or group of patients compared to the average Medicare patient based on certain characteristics and health conditions.

Why the Restructure?
As mentioned at the beginning of this article, when CMS started using HCC codes, it was structured around ICD-9, and, as we know, ICD-10-CM is much more detailed.  This new restructure will help define the HCCs and remove conditions mapped from ICD-9 that do not work correctly with ICD-10-CM.  One example is ICD-9 code V49.71 Amputation status; great toe, mapped to Z89.412  Acquired absence of left great toe, this code currently carries a weight of 189 in V24, this will be removed in V28.

What can we expect?
The final changes are significant; a few of them are listed here.

• The restructuring includes renumbering and changing categories
• Classifications using ICD-10-CM instead of the ICD-9 classification system
• Removal of 2294 ICD-10-CM codes no longer mapping to an HCC
• 268 new diagnosis codes mapped to HCCs
• The current model V24 has 86 HCCs, and the proposal for the new model V28 has 115

We are expecting to see changes in clinical concepts for some revisions.

CMS has given us Advance Notice of all the changes proposed in the new version. The table below is a small sample from CMS; for the entire List, see Table II-4. HCC Differences Between the Current and Proposed CMS-HCC Risk on the Advance Notice of Methodological changes for CY 24, starting on page 50.

Adjustment Models, by Disease Group 

HCC Disease Groups Renumbered

Part of the restructuring, as mentioned, is the renumbering of many HCC disease groups; we have listed them below.

Infectious Disease, Neoplasm Disease, Diabetes Disease, Metabolic Disease, Liver Disease, Gastrointestinal Disease, Musculoskeletal Disease, Blood Disease, Cognitive Disease, Substance Use Disorder Disease, Psychiatric Disease, Spinal Disease, Neurological Disease, Arrest Disease, Cerebrovascular Disease, Vascular Disease, Lung Disease, Eye Disease, Kidney Disease, Skin Disease, Injury Disease, Complications Disease, Amputation Disease,  Transplant Disease, Openings Disease 

Here is the model revision according to the CMS Newsroom fact sheet, 

Part C Risk Adjustment Model Revision

CMS is proposing a revised Part C risk adjustment model. The proposed model includes important technical updates, including restructured condition categories using the International Classification of Diseases (ICD)-10 classification system (instead of the ICD-9 classification system) and updated underlying FFS data years (from 2014 diagnoses and 2015 expenditures to 2018 diagnoses and 2019 expenditures), as well as revisions focused on conditions that are subject to more coding variation. The proposed new risk adjustment model reflects current costs associated with various diseases, conditions, and demographic characteristics, taking into account the ICD-10 diagnostic classification system that has been used for medical payment since 2015 and includes revisions designed to reduce the sensitivity of the model to coding variation. The Advance Notice contains detailed descriptions of these updates.

For important NEWS, information, tools, instructional videos, and HCC Risk Adjustment Coding guidance, visit our TOPIC page. Contact us here if you are interested in a DEMO for HCC Coder. If you do more than just HCC Coding, consider using Find-A-Code, which includes HCC coding tools and many other tools and resources needed for your healthcare business.