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Changes Coming to Risk Adjustment & Hierarchical Categories

While the overall concepts of Risk Adjustment (RA) remain the same, January 1, 2024 will bring significant changes to RA and Hierarchical Condition Categories (HCCs). Currently, Medicare Advantage (MA) plans use version 24 (V24) of HCCs, which was released in 2020.  Beginning in 2024, a 3-year phased introduction of version 28 (V28) will begin. The partial implementation will run concurrent to V24 with shifting influences to fully replace V24 in 2026.    

That’s a lot of numbers to digest so let’s break it down. 

Currently, MA plans are reimbursed based on the 2020 version, V24 of HCCs.  In this version, there are 86 HCC categories which include approximately 9,700 ICD-10-CM diagnosis codes. Each HCC has an associated risk score and a patient can have multiple HCCs over the course of a calendar year. 

Beginning January 1, 2024, the number of HCC categories will increase from 86 to 115 and the categories are renumbered. Included in V28 are 268 new ICD-10-CM codes; however, more than 2000 ICD-10-CM codes will be deprecated. Included in the new diagnosis codes are: 1) alcoholic hepatitis with and without ascites, 2) malignant pleural effusion, 3) anorexia nervosa, bulimia nervosa and 4) severe, persistent asthma. Significant diagnoses removed include: 1) protein calorie malnutrition, 2) major depressive disorder, specified as mild or in remission, 3) certain angina pectoris codes, and 4) dependence on renal dialysis.       

In 2024, 33% of the risk score, and reimbursement, will be based on V28 and the remaining 66% on V24.  Continuing to 2025, 66% of the risk score will be V28 and the remaining 33% will be V24. Finally in 2026, 100% of the risk score will be based on V28. This will require organizations to manage and work with both V24 and V28 databases over the next two years.  In V28, the calculated risk scores will change, with experts anticipating they will decrease.

This update to RA and HCCs does not impact current documentation and diagnosis coding practices and organizations should continue to focus on high quality documentation and coding.