1. What Is Risk Adjustment? Risk Adjustment is a methodology used to adjust payments based on the expected healthcare costs of members. It uses demographics and medical diagnoses to calculate a risk score so that health plans are fairly compensated for higher-risk patients.
2. Two Main Risk Adjustment Models
| Feature | CMS-HCC (Medicare Advantage) | HHS-HCC (ACA / Commercial) |
| Target Population | Medicare Advantage (65+ and disabled) | Commercial (Individual & Small Group, all ages) |
| Funding | Direct government capitation payments | Budget-neutral risk transfer between plans |
| Timeframe | Prospective (uses prior year data) | Concurrent (uses current year data) |
| Primary Use | Medicare Advantage payments | ACA Marketplace risk transfers |
3. Key CMS-HCC Concepts (Most Relevant to My Experience)
- RAF (Risk Adjustment Factor): Score representing predicted costs (1.0 = average)
- HCC (Hierarchical Condition Category): Groups of diagnoses with assigned risk weights
- V24 vs V28: V28 is the current model (fully effective 2026) with 115 HCCs, constraining methodology, and fewer mapped ICD-10 codes
- RADV Audits: CMS audits to validate that submitted diagnoses are supported by medical records
4. My Professional Experience
- Worked with CMS-HCC from 2016 to 2019
- Worked with HHS-HCC from 2020–2021 and 2024–2025
- Deep understanding of both models, including their differences in methodology, documentation requirements, and compliance implications