Health Reform WK-EDGE CMS addresses potential updates to HHS-HCC diagnostic classifications
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Friday, June 21, 2019

CMS addresses potential updates to HHS-HCC diagnostic classifications

By Gina Robinson, J.D.

CMS discusses potential changes coming to diagnostic classifications for the risk adjustment program of the ACA to reflect updated diagnosis codes.

CMS issued a paper that describes the potential changes to the HHS-Hierarchical Condition Category (HHS-HCC) with the intention to solicit comments for when they propose to implement the changes in the future. The potential changes would be based on International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) diagnosis codes. Currently the diagnosis codes are based on ICD-9-CM and have been in effect since 2014. The diagnosis codes are used for the risk adjustment program for the individual and small group markets under section 1343 of the Affordable Care Act (ACA). Essentially, the diagnosis codes predict plan liability for medical and drug spending (CCIIO Letter, June 17, 2019).

Methodology. To better incorporate ICD-10-CM into HHS-HCC, CMS and their contractor, RTI International, conducted analysis of recent data. CMS and RTI used the External Data Gathering Environment to collect enrollee-level claims data from the benefit years 2016 and 2017. These years reflected the first two full years of ICD-10 diagnosis coding. They reviewed and examined the claims data to find changes across adult, child, and infant models.

Potential Changes. CMS came up with a list of potential reclassification changes to the risk adjustment model used for payment. CMS listed the potential changes as:

  • 14 new categories to add as payment HCCs including: type 1 diabetes mellitus, alcohol use with psychotic complications, drug use disorder, narcolepsy and cataplexy, pregnancy without delivery, extensive third degree burns, severe head injury, vertebral fractures without spinal cord injury, and traumatic amputations
  • 1 existing payment HCC was split apart into 2 HCCs: severe asthma and asthma, except severe
  • 3 existing payment HCCs were added to the adult model: severe congenital heart disorders, major heart/circulatory disorders, and atrial and ventricular septal defects and other congenital heart/circulatory disorders
  • 1 payment HCC was deleted: pathological fractures, except of vertebrae, hip, or humerus

Of the potential changes some are more notable than others. For example, CMS proposed to add the HCCs of alcohol use and drug dependence codes. In the current HHS-HCC model there are no alcohol use disorder diagnoses. The motivation in adding these diagnoses is to risk adjust for a larger number of substance use diagnoses and to reflect the wider diagnosis options in the ICD-10-CM. The changes to pregnancy HCCs are also significant. CMS would add three pregnancy without delivery HCCs to the payment model to reflect the cost of care for pregnancies that do not end in miscarriage or delivery within the plan year. CMS also plans on separating ectopic and molar pregnancies because of its considerably higher costs. The last change to pregnancy HCCs would be to separate out pregnancy with delivery with no or minor complications because of the lower costs. Mental health disorders are probably the area with the most significant changes to HCCs and hierarchy of the categories. ICD-10-CM redefined several depression and mood disorder codes, including eliminating the distinction between major depression and depression. The changes made would reflect the newer codes found in ICD-10.

In addition to changes made to HCCs, CMS also made changes to code levels to both payment and non-payment HCCs, hierarchy changes, and revisions to HCC groups in the risk adjustment model.

Impact. CMS found that the HCC updates slightly improve model prediction and fit for the diagnosis codes. It also found that the changes would increase the overall number of enrollees with one or more payment HCCs in the adult and child models. For the newly added HCCs the sets for pregnancy and substance use disorders had the greatest number of enrollees. The impact at an individual level is minimal. Most enrollees remain in the same 0 payments HCC count or 1+ payment HCC count category. Adults would see a higher percentage of change in HCC count than children or infants, with more infants going to a 0 payment HCC count. CMS acknowledges that additional analysis is still needed but wanted to inform the public of the potential changes to the risk adjustment model for the 2021 benefit year or beyond.

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