Tag Archives: Hierarchical Condition Category

How will the pandemic impact Medicare Advantage revenue and risk scores in 2021?

While there is a great deal of focus on resource availability and handling a potential influx of severe inpatient cases resulting from COVID-19 infections, the majority of the United States saw a dramatic reduction in healthcare services around March and April 2020 and measurable reductions continue with great variation across the nation. 

As with many prospective risk adjustment models, Medicare Advantage (MA) and Part D (PD) risk scores are based on medical claims, more specifically diagnoses from face-to-face visits from the year prior to the year in which the risk score drives revenue. For 2021 MA payments, 2020 diagnoses are the basis of the final risk scores. To the extent that beneficiaries delay or avoid care, there may be fewer face-to-face encounters with providers where diagnoses can be recorded and applied toward 2021 risk scores.  

While the Centers for Medicare and Medicaid Services has announced additional flexibilities in including telehealth-based diagnoses in risk score calculations, a significant reduction in overall services is likely to result in a material reduction in both MA and PD risk scores. In this article, Milliman’s Rob PipichKarin Cross, and Deana Bell discuss the results of an analysis they performed to support 2021 MA and PD bids. They present nine scenarios intended to illustrate a range of potential outcomes on 2021 MA and PD risk scores. 

CMS proposal to include dementia to Part C risk adjuster may impact health services

For over 30 years, Medicare Advantage (MA) plans have had their federal revenue adjusted to reflect the expected costs of their enrollees. The risk adjustment mechanism currently used is the Hierarchical Condition Category (HCC) risk adjuster, which assigns a risk score to each beneficiary based on diagnoses and demographic characteristics. Currently, there are 83 HCCs in the Centers for Medicare and Medicaid Service (CMS)-HCC model. An individual’s risk score is the sum of the weights assigned to each category, although some of the categories interact. The current HCC model has distinct factors for each of seven subpopulations. The average HCC score across all beneficiaries is close to 1.0.

In December 2018, CMS released its proposed 2020 risk score methodology for MA plans. The proposal describes proposed updates to the existing HCC risk adjustment model and suggests an alternative model, which includes two additional HCCs for dementia. These categories were selected for inclusion by CMS because CMS considered them clinically meaningful, not discretionary, and good predictors of medical expenses.

Under the proposed alternative risk adjuster, dementia would be included in the risk adjustment calculation for all populations, except institutionalized beneficiaries.

The weights for the dementia disease categories range from about 0.2 to 0.5, depending on the individual’s subpopulation. These weights are similar in magnitude to other chronic conditions, such as congestive heart failure and diabetes.

In this paper, Milliman’s Bruce Pyenson and Charles Steffens discuss various health services issues that come with including dementia in the Medicare Part C risk adjuster.




The “Rxisk” of adjustments in 2018 ACA risk adjustment

The Centers for Medicare and Medicaid Services (CMS) is adding a new prescription drug category classification system to the 2018 risk adjustment model. Starting in 2018, a condition will be identified through a Hierarchical Condition Category with associated medical diagnosis codes, a prescribed medication, or both—each one affecting the final risk member score differently. This paper by Milliman consultants approximates the likely CMS mapping based on the publicly available information to date.




Milliman risk score trend analysis consistent with Advanced Notice

The 2.1% Medicare fee-for-service (FFS) 2016 medical risk score trend was the primary driver behind the increase in the Part C FFS normalization factor proposed in the 2018 Advance Notice.

Milliman’s Darcy Allen, Karin Cross, and Robert Pipich conducted a risk score trend analysis, which is consistent with the trend in the Advance Notice. They also identified the six Hierarchical Condition Category (HCC) contributors shown in Figure 2 as the key drivers of the 2016 risk score trend. For more perspective, read their article “What’s driving the high risk score trend in the 2018 Advance Notice?