Medicare Advantage Transition Brings Big Changes to Risk Adjustment Coding

Medicare Advantage is on the brink of a significant transformation as it transitions from Version 24 (V24) to Version 28 (V28) of the hierarchical condition categories (HCCs) risk adjustment model. These changes carry substantial implications for medical coding and clinical documentation integrity (CDI) professionals, as numerous deletions and additions to HCC categories will affect patients’ risk scores. The transition to V28 is set to take effect in January 2024 against a backdrop of rising Office of Inspector General (OIG) oversight of Medicare Advantage organizations.  

A Medicare Advantage audit performed by the OIG in 2022 exposed a significant number of unsupported HCC diagnoses and upcoding by Medicare Advantage plans. The audits also revealed differences in the coding of Medicare Advantage versus fee-for-service for the same patient. 

Christi A. Grimm, Inspector General, Office of OIG at the US Department of Health and Human Services (HHS), highlighted these concerns during her keynote presentation at the 2023 RISE Conference with a firm warning to the healthcare industry, given the stronger oversight. “I am committed to taking swift action against those who defraud Medicare Advantage.” 

Just as medical treatments and procedures evolve in response to emerging diseases and new biotech capabilities, so do the administrative aspects of healthcare. Coding changes to Centers for Medicare and Medicaid Services (CMS) Medicare Advantage HCCs for 2024 are intended to ensure fairness and accuracy in the program and treat all patients equally, regardless of their payer. CMS anticipates an $11 billion net savings to the Medicare Trust Fund in 2024 through these changes, projecting a 3.1 percent across-the-board reduction in risk scores for 2024.  

It is important to note that previous versions of HCC coding specifications were based on ICD-9. The new Medicare Advantage HCC V28 is built from the ground up in ICD-10, takes full advantage of ICD-10 specificity, expands and renumbers categories, and revises the category nomenclature. Each diagnosis was meticulously reviewed to ensure clinical soundness and cost prediction accuracy for Medicare Parts A and B. 

While some down-scoring of risk will occur, the updates offer valuable opportunities for healthcare providers to adjust their risk scores. Clinical coders, CDI teams, and other health information (HI) professionals play an important role in the transition. 

Transition Overview and HCC Category Changes: Five Aspects to Consider 

As we transition to HCC V28, it is crucial to align electronic health records (EHRs) with the new codes. HCC V28 coding introduces 115 HCC categories, compared to V24’s 86. Nearly all HCC categories will be renumbered, posing a challenge for coders accustomed to memorizing codes. The new version also includes over 900 code deletions involving sequalae/subsequent episode codes such as fracture and poisoning codes. 

Here are five other important aspects of HCC Version 28 to know: 

1. The V28 risk score transition will occur in phases. In 2024, 67 percent of the risk score will be determined using V24 and 33 percent of V28 will be used, with the inverse of 33 percent V24 and 67 percent V28 in 2025. By 2026, 100 percent of the risk score will be based on V28. This phase-in blend over three years was a compromise from CMS and will allow organizations to work out documentation and coding processes. 

2. The process of “constraining” will be used for some diagnoses such as diabetes and congestive heart failure. These related diagnoses will be given the same coefficient, meaning each HCC will carry the same weight. For example, the patient’s risk score will not change whether the patient has diabetes mellitus unspecified or diabetes with complications. This will result in a significant decrease in the risk score for these patients. 

3. Disease interactions will remain the same. The CMS HCC model system allows for higher risk scores for certain conditions in the presence of another disease/condition or demographic status as an indication of higher costs. These conditions do not need to be submitted during the same encounter.  

4. Several notable conditions will be removed from the risk adjustment model in V28, including angina (unless specified as unstable), atherosclerosis of arteries of extremities, bipolar disorders, drug-induced diabetes, immunodeficiency, malnutrition, neuropathy, secondary hyperthyroidism, acute renal failure/acute kidney injury, sarcoidosis, SIADH, sickle cell trait, Sjogren’s syndrome, and toe amputations.  

5. V28 introduces 268 new ICD-10-CM codes, increasing the number of payment HCCs to 115. Notable additions include malignant ascites and effusions, severe persistent asthma, conditions originating in the perinatal period, and various congenital disorders. 

How to Navigate Changes Successfully 

The transition to HCC V28 is a monumental shift in risk adjustment coding. While it brings challenges, it also offers opportunities for healthcare organizations to improve documentation and coding practices, ultimately benefiting providers and patients in the ever-evolving landscape of Medicare Advantage. 

Following are five best practice steps for coding and CDI teams to take now in preparation for January 2024. Many of these tactics should already be part of a strong coding and documentation integrity program. If they are not part of your organization’s culture, now is the time to ramp up your processes, procedures, and internal education: 

• Document all conditions that require or affect patient treatment, management, or medical decision-making. 
• Prioritize clinical specificity to capture the complexity of your patient. 
• Identify top HCCs in your patient population to understand the impact. 
• Map out each change that could alter your administrative workflow and how to reroute your operations.  
• Reprioritize which conditions to assess. 

Kim Felix, RHIA, CCS, is the director of education for HI solutions provider e4health. 

Jeanie Heck, BBA, CCS, CPC, CRC, is an education consultant for e4health.