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HCC Blog – Part 4

Continued discussion surrounding the RA/HCC V28 changes.

This week we’re going to re-visit a few of the RAF/HCC perceptions to alleviate possible confusion.  Recently, I had a few conversations about RAF/HCCs that leads me to believe there is some misunderstanding about the overall concept of this prospective payment system. 

There are two models for HCC risk adjustment. The US Department of Health and Human Services (HHS) oversees the HHS-HCC risk adjustment model, which is utilized by different payers. This covers commercial payers of all ages and determines risk payments for the current year. The Centers for Medicare and Medicaid Services (CMS) uses the CMS-HCC risk adjustment model for the Medicare Advantage program and those who qualify for Medicare or patients 65 and older. This involves calculating risk payments for the next year, prospectively, and includes the disease burden associated with individual enrollees.

Our continued discussion focuses on the CMS-HCC version of risk adjustment.

The CMS-HCC model uses a risk adjustment factor (RAF) score to calculate expected future health costs for each patient. Instead of providing one base payment for every patient, the risk adjustment model allows for more accurate payments for expected costs based on every enrollee’s health status and demographics.

As noted above, the RAF is used to calculate expected future healthcare costs for each patient.  Individual patient RAF scores are calculated during the calendar year and then applied to the next year of reimbursement.  For example, in CY2023, all chronic illnesses captured, which map to an HCC, are a component involved in determining the RAF score, which is then applied in CY2024. 

As 2023 comes to an end, we are all preparing for the V28 implementation and how it will impact documentation and coding. However, during this current calendar year (2023), CMS has already begun to apply V28, along with V24 to RAF for the payment year of 2024.  Beginning with CY2024, the V28 implementation begins a 3-year rollout as follows:

  • CY2024:  67% utilizing V24; 33% utilizing V28
  • CY2025:  33% utilizing V24; 67% utilizing V28
  • CY2026:  100% utilizing V28

Three key points of advice to be considered as we close out 2023:

  • Complete Annual Wellness Visits (AWV) for eligible patients
  • Complete recapture of previously identified chronic illnesses
  • Continue to focus on quality, compliant documentation