What is the CMS-HCC Model?
The CMS-HCC model basically categorizes patients' diagnoses into specific groups. These groups are created based on factors such as severity and complexity of the disease.
These groups or HCCs are assigned a risk score that is essentially the expected cost of care for that patient. The model is then used to adjust Medicare Advantage payments by considering both demographic and health condition data.
The model includes several HCCs. Each HCC is linked to specific diseases or conditions.
Why Do CMS-HCCs Matter?
CMS-HCCs play a critical role in:
- Risk Adjustment: Adjust Medicare Advantage payments based on the health conditions of beneficiaries
- Fair Compensation: Ensures that healthcare providers are fairly compensated for treating high-risk patients.
- Accurate Healthcare Forecasting: Enables more accurate predictions of healthcare costs.
- Incentivizing Quality Care: Identifies and documents all relevant health conditions to ensure proper risk adjustment.
Examples of CMS-HCC Diagnoses
Below are some common diagnoses included in the CMS-HCC model:
- Chronic obstructive pulmonary disease (COPD)
- Heart failure
- Diabetes mellitus with complications
- Chronic kidney disease
- Cancer (e.g., metastatic cancer)
- Severe mental illness
Higher risk score is assigned to diseases expected to have higher healthcare costs.
How Does the CMS-HCC Model Impact Medicare Advantage Payments?
In the Medicare Advantage program, there are two components:
Risk Scores: assigned based on their health conditions as categorized by the CMS-HCC model.
Payment Adjustment: determines the payment amount to Medicare Advantage plans.
Higher scores mean higher expected costs and as a result, higher payments to insurers.
For example:
A beneficiary with multiple chronic conditions - say diabetes and heart failure will have a higher risk score compared to a healthy beneficiary. This would mean higher payment to the insurance provider.