Risk Adjustment & HCC Transition: V24 to V28 for Dementia

HCC Overview
Hierarchical Condition Categories (HCC) is a system used to predict healthcare costs based on patient diagnoses, mainly in Medicare Advantage (MA) programs. The risk score is calculated by summing the weights of a patient’s conditions, with higher scores reflecting more severe health conditions.

The following overview summarizes publicly available CMS guidance regarding the Medicare Advantage risk adjustment model. It is intended for informational purposes only and does not constitute coding, reimbursement, or regulatory advice. Organizations should refer directly to CMS materials and applicable regulations when making operational decisions.

Dementia in Risk Adjustment
Historically, under Version 24 (V24), dementia was classified into two categories:

• HCC 51: Dementia with Complications
• HCC 52: Dementia without Complications

With the introduction of Version 28 (V28), dementia is now divided into three categories:

• HCC 125: Severe Dementia
• HCC 126: Moderate Dementia
• HCC 127: Mild or Unspecified Dementia

This change allows for more accurate risk scoring by better reflecting the severity of dementia and its healthcare needs.

Impact of V24 to V28 Transition

• Granularity: V28 provides a more detailed classification, improving risk score accuracy and better capturing the range of care required for dementia patients.
• Healthcare Resource Use: By differentiating severity, V28 helps align reimbursement with the actual level of care needed for each patient.
• Phase-in: The transition from V24 to V28 is phased in from 2023-2026, with both models in use during the shift.
  • 2025: 33% V24 + 67% V28
  • 2026: 100% V28

Medicare Advantage Reimbursement
MA plans receive monthly payments based on a patient’s Risk Adjustment Factor (RAF) score, calculated from submitted diagnoses, rather than claims-based reimbursements. Payments are determined by the patient’s health status as reflected in their RAF score, which considers multiple encounters and conditions over time.