White Papers / Perspectives

Analysis: the financial impact of the 2019–2020 CMS-HCC risk adjustment model changes

Each year, the Centers for Medicare & Medicaid Services (CMS) announces updates to the Medicare risk adjustment program, often including changes to how risk scores are calculated for member populations of Medicare Advantage (MA) plans. These scores are crucial to a plan’s bottom line, as they are meant to reflect the healthcare expenditures of its Medicare beneficiaries and directly impact the risk adjustment revenue the plan receives from CMS. The changes effective for the 2019 and 2020 payment years (PY) encompassed several mandates from the passage of the 21st Century Cures Act, including the addition of several new risk-generating hierarchical condition categories (HCCs) as well as updates to risk score coefficients.

To assess the potential impact of these newly included HCCs and updated coefficients, Cotiviti’s data scientists applied the 2020 (V24), 2019 (V23), and 2018 (V22) CMS-HCC models to 2017 claim and encounter data for three MA plans of different sizes. Here, we summarize what we learned and offer our own recommendations to assist MA plans in mitigating the impact of these changes.


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