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Getting Ready for 2024 Risk Adjustment Changes

by Yvonne Tso, PharmD, MBA

Medicare Advantage Organizations (MAOs) are about a month away[1] from executing their contracts with the Centers for Medicare & Medicaid Services (CMS). A 3.32% increase in payments to MA plans was announced on March 31, 2023. This may be a good time to review policy changes promulgated by CMS that would have revenue and operational impact from changes to the risk adjustment model. CMS updated the Part C CMS-HCC[2] risk adjustment model for the aged/disabled population for PY 2024 to V28 using ICD-10 diagnoses codes in encounter data. There will be 115 HCC categories instead of 86. However, risk adjustable diagnoses codes are reduced from 9,797 in current model V24 to 7,770 in V28.

Operationally and financially, knowledge of the demographics and population health of the plan’s enrollees (and new enrollees post-Annual Election) becomes imperative. Certain conditions that have been identified to have discretionary coding variations will contribute less weight to risk adjustment. Some of these conditions are common in the MA population. For instance, under V24 (current 2020 model), 330 ICDs are mapped to HCC 108 (Vascular disease) and 145 ICDs mapped to HCC 107 (Vascular disease with complications). Of those ICDs, 182 are no longer represented in the proposed V28 model. If Vascular disease is a prevalent condition in your plan’s population, revenue impact would be palpable. Another scenario is the weight (coefficient value) given to certain HCCs. Under V24, five (5) ICDs are mapped to HCC 18 (diabetes with complications) and HCC 108 (Vascular disease). Under V28, only four (4) ICDs are mapped to HCC 37 (diabetes with complications) but not to HCC 107. Moreover, the weight assigned to diabetes is the same for diabetes with chronic complications, with acute complications and without complications. Payments for a diabetic member with chronic complications would be reduced under V28 from V24. Major Depressive & Bipolar Disorder is similarly affected – HCC 59 has 827 ICDs, under V28, this category is fine-tuned to HCC 152, 154 and 155 with removal of 425 ICDs.

Those who track risk adjustable ICDs would note that the above-mentioned categories could have room for discretionary coding.

CMS acknowledges that changes in V28 could alter enrollee risk scores, even if there is no change in the enrollee’s health status because V28 aims for a more appropriate relative weight, reflecting utilization, coding, and expenses.

The overall impact of the proposed changes on beneficiary RAF[3] scores will depend on patient complexity, age, and geography. However, in general, scores will almost certainly decrease. MAOs are well advised to manage their enrollees’ chronic conditions to avoid deterioration and complications and utilization of services appropriate for enrollees’ conditions. The PY 2024 impact on MA risk scores of the proposed Part C CMS-HCC model is projected to be -3.12%, which represents $11.0 billion net savings to the Medicare Trust fund in 2024.[4]

The table below shows HCC differences between V24 and V28 for some Disease Groups [5]

The table below shows the Coefficient Differences between V28 and V24[6]

The CMS 4185 F2 Final Rule also announced extrapolation of RADV audit findings and applying the sample error rate across the whole plan starting with the 2018 performance year. This change is expected to result in the recovery of $479 million in overpayments from Medicare Advantage plans for 2018 and $4.7 billion for plan years 2023 to 2032.

To ensure coding accuracy, MAOs should educate providers and coders to code accurately, specifically focusing on documented conditions that coexist at the time of the encounter/visit and that require or affect patient care, treatment or management. Do not code conditions that were previously treated and no longer exist[7] (e.g., member had an acute myocardial infarction a month ago and is now in the office for follow-up). Review codes that have changed or deleted risk scores. MAOs should audit submitted encounter data to identify vulnerabilities and delete incorrect codes prior to submission.

Implementation of V28 and the RADV final rule will impact MAOs. The new model will be phased in over a three-year period, with a blend of 33% for the V28 model and 67% for the V24 model for 2023 dates of service. V28 will be used at 67% for 2024 dates of service and fully phased in at 100% for 2025 dates of service. CMS has made tutorials and documents available on their website to help MAOs make the transition.

Integritas Medicare has professionals with expertise in risk adjustment, data analytics, and utilization management who can help you navigate the changes and stay compliant with Medicare rules. Please contact us at 415-596-5277.

[1] All CY 2024 contracts are to be fully executed by Sponsors and CMS by mid-September 2023 [2] HCC = Hierarchical Conditions Categories [3] RAF = Risk Adjustment Factor [4] Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies February 1, 2023 [5] [6] [7] ICD-10_CM Guidelines April 1, 2023 FY2023

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