Healthcare Economist May 5, 2024
To account for differences in disease burden across a Medicare Advantage (MA) plans patient population, uses risk adjustment based on patient disease burden. Specifically, MedPAC notes that:
Medicare uses beneficiaries’ characteristics, such as age and prior health conditions, and a risk-adjustment model—the CMS hierarchical condition categories (CMS– HCCs)—to develop a measure of their expected relative risk for covered Medicare spending.
In February 2023, CMS CMS published a notice of proposed rulemaking to update their HCC risk adjustment algorithm (v28). These changes included (i) leveraging ICD-10 rather than ICD-9 codes as the primary building blocks, (ii) use of 115 HCC indicators rather than 79, and (iii) constraining some coefficients to be identical across severity levels (e.g., diabetes, heart failure)....
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