CMS Makes Big Changes to the Risk Adjustment Model in 2024

In 2024, the Medicare Advantage (MA) market underwent a substantial transformation as the Centers for Medicare & Medicaid Services (CMS) finalized the HCC model (v28) for the year. This redesign, known as the “v28 revolution,” is a significant change from the prior setup. V28 aims to affect not only health plans but also providers and all other parties participating in Medicare Advantage by attempting to more appropriately reflect the healthcare expenses associated with different diseases and patient demographics. To succeed in the changing healthcare environment and navigate this new reality, it is imperative to understand the subtleties of these shifts.

An Introduction to Risk Adjustment

Let us first describe the purpose of the risk adjustment model before getting into the specifics. Capitated payments, a set sum per beneficiary, are given to Medicare Advantage plans to cover their medical costs. To provide equitable remuneration, risk adjustment vendors can examine enrollees’ health states. Plans with sicker, higher-cost patients receive more payments to cover expected increased costs. The risk adjustment model converts diagnoses into scores representing a patient’s projected resource use.

The Need for Change: Addressing Shortcomings of the Old Model

The prior methodology, which relied on the ICD-9 diagnosis risk adjustment coding system, had shortcomings. It lacked the granularity to capture the intricacies of complex conditions, which could lead to incorrect risk evaluations. Additionally, there were questions about the model’s capacity to keep up with changing medical practices and coding requirements.

The New Era: Enter v28

The new model, which is based on the more thorough ICD-10-CM diagnosis codes, brings many significant changes:

  • Increased Specificity: Version 28 shows a considerable increase in HCCs. The 2020 model (v24) incorporated 86 of the 204 categories in payment calculations. v28 has 266 HCCs, with 115 affecting payments. This improved granularity enables a more accurate representation of patient complexity.
  • Focus on Severity: The new model focuses on illness severity. For example, v28 adds three new HCCs for advanced stages of atherosclerosis in the extremities, while less severe patients receive lower-level HCCs. This guarantees that plans receive adequate reimbursement for managing patients with more complex diseases.
  • Metabolic Disease Revamp: The metabolic disease group has increased from three payment HCCs in v24 to four in v28. Notably, high-priced lysosomal storage disorders receive their own HCC, while metabolic and endocrine disorders are split based on treatment cost and clinical criteria. This improves the distribution of resources under certain conditions.

A Phased Implementation: Smoothing the Transition

CMS recognizes the challenges of transitioning to a new model. To aid the transition, v28 will be phased in over three years:

  • 2024 (Payment Year 2024): The risk scores will be a mix, with 67% calculated using v24 and 33% using v28. This enables progressive adjustments for plans and providers.
  • In 2025 (PY 2025): The blend moves to 33% v24 and 67% v28, indicating further reliance on the new model.
  • In 2026 (PY 2026): The full implementation of v28 is complete, with 100% of scores generated using the new model. 

Potential Impacts and Considerations

The changes in v28 offer both opportunities and challenges:

  • Improved Accuracy: More exact risk scores may result in fairer reimbursement for plans that manage sicker patients.
  • Coding Optimization: Plans may need to improve their risk adjustment coding procedures in order to capture diagnoses accurately under the new HCCs. This can be a complicated procedure, and risk adjustment vendors can provide invaluable assistance in negotiating the complexities of v28. These companies can provide coding audits, coder instruction on the new HCCs, and technology solutions to help with the coding process.
  • Data Validation: The Risk Adjustment Data Validation (RADV) Final Rule, published in January 2023 alongside v28, increases data validation processes to assure the correctness of reported diagnoses. Plans should be ready for more scrutiny of their coding processes.
  • Administrative Burden: The mixed model implementation adds work to plans in the early years as they negotiate both the old and new models concurrently.

Looking Ahead

The implementation of v28 is a significant step towards a more accurate and refined risk adjustment system for Medicare Advantage. While challenges exist, the potential benefits for fairer reimbursement and improved patient care are substantial. By staying informed, adapting practices, and fostering collaboration, stakeholders can navigate the transition and ensure their success in the evolving healthcare landscape. 

Optimizing for Success Under v28: Strategies for Stakeholders

Here are some concerns for stakeholders:

  • Investing in Coding Expertise: Plans may benefit from investing in additional coder training to ensure that they are proficient in implementing the new HCCs included in version 28. This can assist in improving risk adjustment coding accuracy while avoiding potential audits or penalties.
  • Leveraging Technology Solutions: Under the new paradigm, advanced data analytics technologies can help discover coding gaps and improve risk capture. These tools can assist plans in improving risk adjustment coding accuracy and increasing their risk scores.
  • Collaboration Between Plans and Providers: Effective communication and collaboration between plans and providers are critical to successful implementation. Providers must be aware of the changes in version 28 and how to document patient conditions best to ensure proper coding and risk collection.
  • Staying Current on CMS Guidance: CMS periodically provides guidance and updates on the risk adjustment model. Plans and providers should stay up to date on these changes to ensure they comply with the most recent rules. 


The 2024 risk adjustment model marks a substantial shift in Medicare Advantage. While there are problems during the shift, better accuracy and a focus on disease severity show promise for a more equitable reimbursement system. Plans and providers may negotiate the changes and guarantee their position for success in the developing healthcare ecosystem by being updated about the subtleties of v28 and adapting their practices as needed.

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