Since the CMS-HCC risk adjustment payment paradigm took effect in 2003, our company has seen considerable changes, but this year takes the cake, as they say. Frankly, a moment (or really, a week) of silence would be appropriate to mourn the sunsetting of the current MRA program. Seriously.

Every year, the Centers for Medicare and Medicaid Services (CMS) publishes a long document detailing payment changes for Medicare Advantage plans and this year, CMS finalized the 2024 Risk Adjustment Model. In a nutshell, CMS overhauled the program, which was still being impacted by ICD-9 in the classification of codes into HCCs (hierarchical condition categories) and in certain aspects of the payment calculations. This is all in CMS’s continuing quest to have MA coding more closely mirror that of fee-for service (FFS) Medicare. Read this article for a brief explanation of the differences in these two styles of payment.

Clinical revisions were made to the HCC model because of “discretionary coding variations” that were deemed to be less reliable predictors of future medical costs. This means that a large number of routinely coded conditions in a traditional primary care practice are being removed from the model. The number of ICD-10 codes mapping to HCCs will decrease from 9,797 to 7,770. For a summary and list of conditions being phased out of the model, read Part 2 of this article series by clicking here.

Some of the remaining conditions have been re-mapped because of newly created HCCs or the splitting of existing HCCs. The 2024 HCC model will now include 115 categories, up from 86 in the 2020 model. Those of us who can rattle off HCCs and their hierarchies in our sleep will have our brain cells taxed as we adapt to yet another new normal. (LOL)

Finally, the coefficients for diabetes, which spans three HCCs ranging from no to acute to chronic complications, have been recalibrated to be the same. From a practical standpoint, this means that there is no difference in payment for diabetes, regardless of any complication, although some of the complications themselves may still prompt additional payment. The world of CHF changed slightly with the potential for payment impact in the future. For now, CHF codes have been reassigned to three HCCs: acute on chronic, acute, and chronic. Their placement in a hierarchy portends payment differentials where the (more frequent) chronic conditions will have lower coefficients and thus, payments. But let’s not borrow trouble right now.

The one ray of sunshine is that the 2024 model will be phased in over time. For 2024, CMS will calculate risk scores by blending 67% of the coefficients from the 2020 model and 33% of the 2024 model. This means that for conditions exiting the current CMS-HCC model, plans will receive only 2/3 payment. In 2025, the blend will shift to 33% calculated with the 2020 model and 67% using the 2024 model, with 100% reliance on the 2024 model in 2026.

On what should providers focus right now and moving into 2025 to minimize losses? We cover that in Part 3 of this article series, which you can read by clicking here.