Hierarchical Condition Category (HCC)
Hierarchical Condition Category (HCC) is the diagnosis-based risk adjustment model used by CMS to calculate payment to Medicare Advantage plans, ACOs in REACH and MSSP, and certain state Medicaid managed care programs.
Definition.
HCC scores each Medicare Advantage beneficiary by mapping captured diagnoses to specific HCC categories, summing their coefficients, and producing a Risk Adjustment Factor (RAF) score. Higher RAF = higher CMS payment to the MA plan. The CMS-HCC V28 model is the current production version, replacing V24 through a phased 2024-2026 transition.
Key points.
How RAF scoring works
Each HCC category carries a numeric coefficient. A beneficiary's RAF = sum of their captured HCC coefficients + demographic adjustments. Average RAF in Medicare Advantage is approximately 1.0; population averages vary by plan and geography.
V28 vs V24
CMS-HCC V28 dropped average RAF approximately 9.3 percent vs V24 in the transition. Several diabetes complications, CKD categories, depression, and anxiety lost weight. New conditions gained coefficients. V28 is now fully phased in for payment year 2026.
Capture vs recapture
Capture = coding a new HCC for a beneficiary. Recapture = coding an HCC that was captured prior year but not yet coded current year. RAF resets every January 1; chronic conditions require yearly recapture.
RADV audits
Risk Adjustment Data Validation audits review MA plan and provider coding for HCCs. Findings can extrapolate to full plan membership. Defensible chart documentation is the only adequate audit defense.
Where HCC AI helps
AI surfaces suspected HCCs from chart documentation, problem lists, medication lists, and lab results. Properly tuned for V28, AI can identify 20-40 percent more gap-closure opportunities than manual chart review alone.