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The 2024 Update: A Closer Look at Medicare’s Risk Adjustment and Code Changes

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The Centers for Medicare & Medicaid Services (CMS) has announced changes to the Medicare Advantage risk adjustment model for 2024. The new system will introduce more Hierarchical Condition Categories (HCCs) and fewer ICD-10 diagnosis codes. This update marks a transition from the current HCC model, developed under the ICD-9 diagnosis codes, to a new system based on the more detailed and current ICD-10-CM codes. This change is anticipated to more accurately represent healthcare costs associated with various diseases, conditions, and demographic characteristics. Healthcare providers and payers must understand these changes to ensure accurate reimbursement and effective patient care.

Overview of the Changes

The 2024 risk adjustment model is distinguished by the introduction of 115 payment HCCs, an increase of 29 categories compared to the 85 categories from the 2020 model. This expansion aims to offer a more nuanced and comprehensive picture of patient risk profiles, enhancing the precision of the risk adjustment mechanism. However, the number of ICD-10 diagnosis codes eligible for payment has significantly decreased by around 2,269 unique codes from the Hierarchical Condition Category model, while there has been an increase in HCCs. This considerable decrease is primarily driven by the shift from the older ICD-9 to the more detailed ICD-10 diagnosis codes, which reflects an adaptation to current healthcare costs and conditions.

CMS attributes 97% of these changes to the necessary remapping of diagnoses to HCCs due to the transition to ICD-10 diagnosis codes. Only about 3% of these changes relate to what CMS terms discretionary coding, where there is wide deviation in diagnosis and coding, leading to poor prediction of costs. Conditions that continue to be risk-adjusted but are most impacted by the reduction in ICD-10 codes include major depressive disorder, vascular disease, and inflammatory disease. Under the new healthcare payment model, certain conditions such as protein calorie malnutrition, angina pectoris, and atherosclerosis of extremities are no longer eligible for payment HCCs. This change highlights a significant shift in the payment approach, emphasizing the importance of precise diagnosis coding to capture patient risk and ensure appropriate reimbursements.

Phasing in the New Model

CMS has meticulously planned a three-year phase-in process in response to the substantial changes in the 2024 Medicare Advantage risk adjustment model. This strategic approach is designed to distribute the impact of the transition over a period, thereby providing healthcare providers and payers with crucial additional time to adapt to the new system.

2024 risk scores will be calculated using a blend of 67% from the current model and 33% from the finalized 2024 model. This initial phase allows for a gradual adaptation, balancing elements of both the existing and new models. In 2025, shifting to 33% from the current model and 67% from the new model. By 2026, the transition will be complete, with risk scores entirely based on the new model. This phased approach reflects CMS’s commitment to mitigating immediate impacts and providing a buffer for healthcare entities to seamlessly adapt to the new model.

Impact on Specific Disease Categories

In the 2024 CMS-HCC model, significant changes have been made to several disease categories to align payment models more closely with clinical severity and the cost of care, including the following:

Vascular Disease: The HCC model has added three new categories to address more advanced cases of atherosclerosis of extremity arteries. Cases with milder symptoms are now assigned to lower-level HCCs.

Metabolic Diseases: The group dealing with metabolic diseases has grown to include four payment HCCs, increased from three in the 2020 model. This expansion now includes a new HCC specifically for high-cost lysosomal storage disorders and separates metabolic and endocrine disorders into different HCCs based on their costs and clinical considerations. Conditions with lower cost implications or indicating lab test results have been moved to non-payment HCCs.

Heart Diseases: The Heart disease group in the 2024 model has expanded from five to ten payment HCCs. This includes splitting Congestive Heart Failure HCC into five payment heart failure HCCs based on clinical severity and cost differences. An HCC for Heart Transplant Status/Complications was added, and HCC 227, covering Cardiomyopathy/Myocarditis, was separated as a distinct HCC.

These updates show CMS’s efforts to align payment models with clinical reality and cost of care. By focusing on more severe cases and differentiating conditions based on cost and clinical factors, the 2024 CMS-HCC model aims to create a fairer and more precise system. This approach underscores the importance of detailed and accurate diagnosis coding in the evolving healthcare payment landscape.

Challenges for Healthcare Providers

The 2024 overhaul of the HCC model emphasizes the importance of precise diagnosis coding for healthcare providers. The transition to managing two versions of HCC models requires providers to adapt their coding practices to ensure proper risk capture and reimbursement. Providers can efficiently manage the transition and optimize reimbursement opportunities by investing in advanced coding solutions and data analytics tools. Accurate diagnosis coding is crucial for appropriate payments reflecting patient risk and identifying patients requiring additional care. Healthcare providers need to understand the new HCCs and their corresponding ICD-10 codes to ensure accurate diagnosis coding.

Broader Implications and Future Outlook

The changes in the 2024 MA program and other risk adjustment modifications are expected to lead to a 3.12% reduction in plan payments, amounting to an estimated $11.0 billion in net savings to the Medicare Trust Fund.

This significant shift in payment models demonstrates the evolving nature of healthcare financing and emphasizes the need for continual adaptability in the healthcare sector. As the landscape evolves, healthcare providers and payers must remain informed and proactive to navigate these changes successfully. This will ensure their ongoing commitment to quality patient care in an environment of changing financial incentives and regulatory requirements. By adapting to these changes, the healthcare sector can continue to evolve in a way that prioritizes financial sustainability and high-quality patient care delivery.

Conclusion

While it is important to remember that changes and updates are not made every year to the Risk Adjustment model and codes, when changes are made it is important to stay in the know about it. Stakeholders can effectively maneuver through this new landscape by comprehending and adapting to the 2024 Medicare Advantage risk adjustment model changes. The shift requires a greater emphasis on precise and accurate diagnosis coding, particularly with managing two versions of the HCC models during the transition. Changes in disease category structure and payment models focus on aligning payment with clinical severity and healthcare costs. Providers must invest in advanced coding solutions and data analytics tools to optimize reimbursement opportunities and maintain financial stability. Staying informed and proactive is crucial to ensure success amidst shifting financial incentives and regulatory requirements.

Navigate the 2024 Medicare Advantage Risk Adjustment with GeBBS Healthcare Solutions

As the healthcare industry navigates the complexities of the 2024 Medicare Advantage risk adjustment model, the need for accurate, efficient, and comprehensive solutions is more critical than ever. GeBBS Healthcare Solutions stands at the forefront of this challenge, offering various payer solutions tailored to enhance risk adjustment processes and improve quality initiatives.

GeBBS offers a flexible technology platform that helps healthcare organizations adapt to changing payment models. We simplify the risk adjustment process with real-time tools and expert services, ensuring accurate RAF scores and optimal reimbursement.

In a world where accurate risk adjustment is vital to financial stability and patient care quality, partnering with GeBBS Healthcare Solutions offers a strategic advantage. Whether you are a government payer, a risk-bearing provider, or a healthcare organization grappling with the complexities of HCC coding and RAF score calculations, GeBBS provides the solutions you need to succeed.

Discover how GeBBS Healthcare Solutions can support your organization through the complexities of the new Medicare Advantage risk adjustment model and beyond.

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