What does your practice need to know about risk coding in the CMS 2024 Advance Notice document?

CMS issues an updated Advance Notice document each year, officially titled for 2024 “Advance Notice of Methodological Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies”.

On February 1, 2023, the 2024 document was released, all 139 pages, with focused initiatives and broad updates. You can find the full document here and the more concise, four page FAQ here. One of the more noteworthy areas for primary care practices is the commentary on risk coding, with CMS proposing more of a transition to an ICD-10 basis and the elimination of many procedure codes.

Below is an excerpt from the CMS FAQ document addressing this reduction in procedure codes:

Why does the Advance Notice eliminate some diagnosis codes?

These proposed adjustments in some codes help to ensure that the risk adjustment of MA payments better reflects a beneficiary’s costs of care, which means MA plans serving beneficiaries with greater health care needs would receive appropriately higher payments. To be clear, the proposed model updates do not impact coverage of Medicare services or requirements for MA plans to deliver covered services; rather, these proposed changes improve the accuracy of payments made to MA plans for covering care for enrollees.

The majority of these changes are associated with the proposed transition to ICD-10 from the outdated ICD-9 coding system. As described above, the ICD-10 coding system includes more codes than ICD-9 because this updated system is more granular and precise. Not all of these more granular codes, however, are predictive of increased health care costs. To that end, CMS evaluated each ICD-10 code to see if the specific code was associated with higher health care costs. Applying longstanding principles of risk adjustment, CMS then proposed excluding codes that are not accurate predictors of increased costs, such as codes that are duplicative or discretionary and do not add incremental costs. These changes would help to spread MA payments to each diagnosis to more accurately reflect the cost of care, ensuring plans are not underpaid or overpaid for the care provided to enrollees.

In a more innocuous move, CMS has also proposed a partial renumbering of HCC codes, including an intentional gap in some code families to account for future code additions. 

Of greater interest is the overall restructuring of HCC codes, with the stated move to ICD-10 as the basis, and the stated goal to “spread MA payments to each diagnosis to more accurately reflect the cost of care, ensuring plans are not underpaid or overpaid for the care provided to enrollees”.

Below is an excerpt of an extensive chart displaying the difference in the current model (V24) and the proposed model (V28). The entire chart is on pages 50-57 of the Advance Notice document.

A noteworthy item from this chart is the overall increase in payment HCCs from 86 to 115, with the overall reduction of diagnosis codes from 9,797 to 7,770. Third party analysis has projected that the eliminated diagnosis codes will be those only used by Medicare Advantage plans, and could potentially limit the choices available to clinicians based on current coding practices, yet will still provide for accurate patient diagnosis.

The commentary period ended on March 6, 2023, and comments will eventually be made available publicly.

What will all of this mean to you as a practice leader, clinician, or support team member as you go through 2023 in anticipation of these changes? While the full impact will not be fully known until after the final document is released by CMS, the aim of the move is to consolidate codes and more accurately reflect disease states and costs. Clinicians who have taken an active approach to learning about coding best practices and guidelines will continue to be best prepared to implement these changes. Support team members and coders will continue to receive education, and will be able to facilitate the 2024 guidelines.

Streamlining patient care and accurately collecting data through valid condition assessment will continue to be more critical, so, the more you can partner with trusted sources such as health plan staff, coding and medical organizations, and third party partners, the more prepared you will be.

Where there is still much uncertainty about how the 2024 year will look when it comes to coding, change is inevitable, and the intent of CMS appears to be to keep up with how clinicians are using available HCC codes, to stabilize costs and continue to improve patient care.