CY 2011 CMS-HCC Methodology Changes Announced

On February 19, 2010, CMS sent advance notice to Medicare Advantage Organizations regarding methodological changes for Calendar Year 2011 for Medicare Advantage capitation rates. The final announcement is scheduled for April 5, 2010.

The notice tells of the CMS recalibration of the CMS-HCC (Hierarchical Condition Categories) risk adjustment model using the most recent data and a clinical update of the diagnosis groupings used as the building blocks of the condition categories. CMS will increase the number of groupings from 70 to 87 by including new groupings and splitting some existing groupings. The new groupings will provide for risk adjustment based on dementia - both with and without complications, morbid obesity, fibrosis of the lung and exudative macular degeneration. 

The HCC risk adjustment model also performs risk adjustment based on whether a patient has a specific partnership of diagnoses that together create a much higher cost and resource utilization. Examples of these partnerships are the presence of diabetes and congestive heart failure together, or the presence of both congestive heart failure and chronic obstructive pulmonary disease. These disease combinations were also updated for CY 2011. Assignment of a patient to one or more HCCs is based on the severity of the patient’s illness as documented and coded with the ICD-9-CM diagnosis coding system.

The risk adjustment model also incorporates the use of demographic factors for adjustment, such as age and the enrollee’s county of residence. CMS has announced that no changes are planned for the demographic factors to be used in CY2011.

The advance notice document can be found of the CMS website at: http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/2011CombinedCallLetter.pdf.  

For a greater understanding of how Medicare Advantage Plans are paid, review the payment system description found at: http://www.medpac.gov/documents/MedPAC_Payment_Basics_08_MA.pdf . 

HCC’s are discussed in detail in the original CMS investigative report, found at: http://www4.cms.hhs.gov/Reports/downloads/pope_2000_2.pdf .

Written by: Lynn Kuehn, MS, RHIA, CCS-P, FAHIMA