On January 1, 2025, CMS will complete the phased transition of the Hierarchical Condition Categories (HCC) model from Version 24 to Version 28. HCCs are part of risk adjustment models CMS uses to estimate future healthcare costs for patients who have chronic medical conditions, which must be diagnosed and captured yearly. The diagnosis codes in the CMS-HCC model reflect the patient’s acuity.
Risk adjustment is important for several reasons. It helps healthcare organizations provide fair payment to doctors and other care providers based on the patients they treat by recognizing that it costs more to treat patients who have chronic conditions than healthier patients. It also allows providers and payors to better allocate resources to help manage patients and their chronic conditions, rather than just focusing on healthier patients who have lower associated costs.
Improving patient outcomes is another result of accurate HCC documentation. Patients with chronic disease management have better disease control when they are seen at least annually. HCCs identify high-risk patients who could benefit from care management programs. This program also can help reduce readmissions and improve quality care.
With the transition to Version 28, CMS aims to improve the accuracy of the HCC model. Healthcare organizations should be aware of the changes and look for opportunities to improve their documentation accordingly.
Key Changes in CMS-HCC Version 28
The most notable changes in Version 28 include:
- Restructured HCCs: The number of HCCs has increased from 86 in Version 24 to 115 in Version 28. This allows for more detailed categories of conditions, which improves the model’s predictive accuracy.
- Updated Data Years: The model now uses data based on diagnoses from 2018 and expenditures from 2019, whereas the previous model used diagnosis and expenditure data from 2014 and 2015, respectively.
- ICD-10 Integration: ICD-10-CM codes were first implemented in 2015, but prior CMS-HCC model versions still used ICD-9-CM codes. The change to ICD-10 will enhance the model’s ability to reflect current medical practice and coding standards.
- Changes in HCC Mapping: Some HCCs have been renamed, renumbered, or redefined. For example, diabetes diagnoses used to be mapped to HCC 17, 18, and 19, and are now mapped to HCC 36, 37, and 38.
- Additions & Deletions of ICD-10 Codes: Version 28 includes 268 new codes, while 2,294 codes have been removed from the previous Version 24.
Implications for the Transforming Episode Accountability Model (TEAM)
CMS announced the new Transforming Episode Accountability Model (TEAM) in the Inpatient Prospective Payment System (IPPS) final rule for fiscal year 2025, creating a mandatory episode-based, alternative payment model for acute care hospitals in designated core-based statistical areas (CBSAs) for five high-volume surgical procedures: lower extremity joint replacement, surgical hip femur fracture treatment, coronary artery bypass graft, spinal fusion, and major bowel procedure. Patient-specific risk adjustments based on HCC count and individual HCCs are part of the target price calculation for the five episodes. The hospitals required to participate in TEAM should review and understand the changes in CMS-HCC Version 28 as they prepare for TEAM implementation starting January 1, 2026.
Implications for Social Determinants of Health
Also new for 2025 are several HCCs related to social determinants of health (SDOH). These new HCCs include:
- Z59.10: Inadequate housing, unspecified
- Z59.11: Inadequate housing environmental temperature
- Z59.12: Inadequate housing utilities
- Z59.19: Other inadequate housing
- Z59.811: Housing instability, housed, with risk of homelessness
- Z59.812: Housing instability, housed, homelessness in past 12 months
- Z59.819: Housing instability, housed unspecified
How Forvis Mazars Can Help
Healthcare organizations should develop a workflow to incorporate the changes from Version 28 into their clinical documentation processes. Capturing accurate, specific, up-to-date HCCs using ICD-10-CM codes will help providers receive full reimbursement for treating patients with chronic conditions and deliver care that leads to better health outcomes for those patients.
Our experienced professionals have a strong understanding of revenue cycle/revenue integrity and the impact of documentation related to capturing HCCs. We can help providers identify areas to improve their current documentation and provide education with respect to clinical documentation to help support HCC capture.
If you have questions or need assistance with documentation and HCC capture, please reach out to a professional at Forvis Mazars.