Hierarchical Condition Categories, or ‘HCC codes,’ have been used throughout the healthcare sector since 2004, using value-based and risk adjustment models to capture accurate data to predict the costs linked with future patient treatments.
As the prevalence and variations within chronic conditions change, so too do the codes created by the CMS, with the current CMS-HCC Version 24 (v24) due to be revised in 2024, with the introduction of Model Version 28 (v28).
While annual updates are the norm for HCC codes and the ICD-10-CM codes used to categorize diagnoses, procedures, and symptoms, this shift presents a more significant transition–making proper diagnosis coding essential.
Why Are CMS HCC Codes Changing to Model Version 28?
The CMS has previously introduced updates to code sets once a year, but has recently reformed this structure to include two yearly updates in April and October. In 2023, the April revisions included the removal of seven ICD-10-CM codes, one edit, and forty-two new codes.
One of the important nuances to consider when updating any risk adjustment coding and HCC guide for practitioners is to understand that the current reimbursement model was originally established using the older ICD-9-CM coding data.
That data feeds into the system to help establish that conditions, diagnoses, and other factors accurately indicate future healthcare expenditures. In 2015, the industry transitioned to a new series of ICD-10-CM codes but retained the foundation created using the now-superseded code sets.
The CMS aims to calibrate the model each year, using updated expenditure and diagnostic data to identify where changes are required and to ensure the model evolves with patient needs and innovations within the healthcare sector. Rather than issuing batches of updates, revisions, and code removals periodically, the CMS has decided that the more recent data collated through ICD-10-CM claims is now better suited to predict expenditures, which means that in 2024, the model will be reclassified using the more recent code bases as the foundation.
What Are the Impacts of HCC Coding Changes in 2024?
The primary outcome will be that the CMS renames and renumbers HCC codes in v28, focusing on the more frequently used codes, aiming to address imbalances. For example, the number of HCC codes in use has risen, but the ICD-10-CM codes categorized as HCCs have reduced by around 2,000.
V28 will consolidate scenarios where codes are potentially duplicated, with overlaps between newer HCC codes related to the same conditions or diagnoses as ICD-10-CM codes classified as HCCs in v24.
The update will also consider the changes made in RAF (risk adjustment factor) scoring, with differentials between coefficient risk scores assigned in v28 that reflect the more recent data. For instance, v24 gave an RAF score of 0.147 against chronic hepatitis, whereas v28 assigns a score of 0.185.
How Can Healthcare Providers Prepare for CMS-HCC Version 28?
The key will be to ensure providers and their clerical infrastructures are well prepared. A transition phase will run until 2026 and remain in place until all payments have been calculated using v28. Healthcare providers must ensure they are equipped to manage two concurrent versions and have the right tools to identify complexities, such as where a condition may be categorized as an HCC in one version but not the other.
Further, potential diagnoses may be treated as HCC codes in both versions but with variable RAF scores, as we mentioned earlier. It will be important for healthcare organizations to trace the most commonly used HCCs within their patient cohorts and demographics to assess the impact of the changing model versions.
Within this period of change, documentation and exacting clinical specificity will be imperative, ensuring healthcare providers can accurately capture and record the data most relevant to their patient groups and submit precise data with the correct CMS coding.