Understanding the Impacts of Version 28

Our readers know that Hierarchical Condition Categories (HCCs) are groups of diagnoses.  Each diagnosis is classified to a payable or non-payable HCC based on whether the diagnosis meets one or more of the 10 payment HCC principles.  Each HCC has a coefficient which is like a DRG weight. 

The HCC payment is the accumulation of relative factors (also like weights) for certain socio-demographic attributes of the insured individual, plus the coefficients for the HCCs that have been reported during the year for the insured individual, plus any conditions that may have an interaction that may complicate the patient’s health and healthcare, such as diabetes with chronic heart failure (CHF) or chronic lung disorder with cardio-respiratory failure and finally, an add-on coefficient if the individual has a certain number of payable HCCs.

The aggregation of the weights multiplied by what is similar to the DRG conversion factor plus some other factors creates the payment amount.  So, what has HCC Version 28 done to the version (24) which had been in place since service year 2019?

First impact:

Version 28 is using the claims data from 2023 to calculate the 2024 payments.  But the use of Version 28 wasn’t announced until March 31, 2023.  So, if no one went back and reviewed the first quarter claims, there may have been lost HCCs.

Second Impact:

Version 28 reduced the number of diagnoses that qualified for payable HCCs.  Why? Well, Version 28 used ICD-10-CM diagnoses.  Yes, your read that correctly!  Eight years after ICD-10 was implemented in the United States by the Centers for Medicare & Medicaid Services (CMS), CMS finally started using ICD-10-CM diagnoses for the Medicare Advantage HCCs.  This also meant that the ICD-10-CM diagnoses had to be evaluated against those 10 payment HCC principles which I mentioned earlier. 

Because some of the ICD-9 codes qualified for a payment HCC, the specificity of ICD-10 eliminated approximately 2,000 diagnoses. 

Conditions that were eliminated included some acute conditions, but their counterpart chronic condition remained; simple conditions were eliminated but the related complex conditions remained; and some mild conditions eliminated, but major iterations of those conditions were retained and so forth. 

Some common conditions that triggered payable HCCs were no longer included.  So, the weights for those payment HCCs were lost.

Third Impact:

Constraining was introduced.  For some categories of HCCs, the HCCs in the same category, regardless of their progressive complexity, each were assigned the same weight. In version 24, they had progressively higher weights consistent with their complexity. So, some HCCs that were present in Version 24, remained in Version 28 but had a lessor weight.  Two of these categories were relatively common:  diabetes and dementia.  Another hit to reimbursement.

Summary:

Although Version 28 phases the new weights in with a blending of Version 24 weights for this first year through the third payment year, Medicare Advantage plans are now starting to feel the impact.  And, yet another change—extrapolation. That subject will need to be a topic for another article.

Regardless, coding continues to be at the heart of HCC reimbursement with a very important role for ensuring that the most specific diagnosis is documented and coded.  Coding professionals will need to function more in a clinical documentation integrity and provider education role to help providers understand that although some conditions no longer qualify for a payment HCC, the purpose of the medical record is to document all conditions considered and addressed.

About the Author:

Rose T. Dunn, MBA, RHIA, CPA, FACHE, FHFMA, FAHIMA is a past president and former interim CEO of AHIMA and recipient of AHIMA’s distinguished member and legacy awards.  She is Chief Operating Officer of First Class Solutions, Inc.^sm, a healthcare consulting firm based in St. Louis, MO.  First Class Solutions, Inc.^sm assists healthcare organizations enhance or transform their HIM operations, facility and physician office documentation, and revenue cycle performance and provides coding support and coding audits.  Rose also is the author of Libman’s HCC Fundamentals and Auditing programs.