Tag Archives: Hierarchical Condition Category

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?