Providers have to continuously balance delivering the best patient care possible with administrative responsibilities and ensuring the financial sustainability of their practice. That means it is important to keep up with coding changes, such as the Hierarchical Condition Categories (HCC) model version 28 (V28) that is set to replace the V24 model by 2026.
While the V28 model changes may lead some providers to anticipate reimbursement shortfalls, they also present a crucial opportunity to address an existing gap in patient care—particularly in the early detection and coding of dementia, which is now more critical than ever under the revised HCC structure.
Research shows that dementia is generally underdiagnosed. It’s estimated that by 2050, roughly 139 million people worldwide will have dementia (Alzheimer’s Disease International), but by current standards, an additional 60% of cases may remain undiagnosed (Lang et al., 2017). The increasing demand for dementia care represents a major challenge to population health management in the context of an already strained medical system.
For providers who are making dementia detection a priority in response to the changes to V28, it’s time to evaluate patient experience workflows, documentation processes, and billing and administrative requirements, in order to achieve practice sustainability while managing population health.
Read on for a complete guide to the changes, the impacts on dementia screening and care, and practical steps for transitioning to the new model.
Let’s start with some background. For adults over 65 years old, Medicare is the government-funded healthcare payer option, while Medicare Advantage (MA) is a privately-managed option.
A risk adjustment factor (RAF) score is based on an individual’s health conditions, care needs, and their funding coverage needs. In other words, individuals with complex health conditions or more than one condition require additional care and funding, which is represented by a higher RAF score.
The RAF score determines how much funding is allocated by the Center for Medicare and Medicaid Services (CMS) to the Medicare Advantage Organizations (MAOs) per patient.
To illustrate, consider two patients:
Patient A, who has been diagnosed with dementia along with other chronic conditions such as diabetes and heart disease; and,
Patient B, who is relatively healthy with no major health issues.
Patient A’s RAF score will be significantly higher than Patient B’s due to the complexity and intensity of care required not only for managing multiple chronic conditions but also for addressing the progressive nature of dementia.
As a result, Medicare Advantage organizations will receive more funding for Patient A, enabling them to provide targeted interventions and comprehensive management. This additional funding supports earlier detection of conditions such as Mild Cognitive Impairment (MCI) and dementia, allowing for tailored treatment plans, and ongoing care strategies. By Identifying and addressing early symptoms, healthcare providers can ensure that patients receive the specialized care needed to maintain their quality of life.
According to CMS, the new HCC model version 28 (V28) is designed to better reflect utilization, cost, and diagnostic patterns observed in the Medicare population. This updated model aims to provide a more accurate representation of patient health status and resource needs, thereby improving the precision of risk adjustment and payment calculations.
The enhanced V28 model introduces refinements in how conditions are categorized and weighted, ensuring that the risk scores more accurately correlate with the actual healthcare costs incurred by different patient populations. This enhanced accuracy is expected to lead to fairer and more equitable payment distributions, reducing the risk of overpayments or underpayments to Medicare Advantage (MA) plans.
Moreover, the V28 model seeks to align coding and reimbursement processes more closely between MA plans and traditional fee-for-service (FFS) Medicare. By standardizing these processes, CMS aims to create a more unified and transparent system that supports both quality care delivery and financial sustainability. This alignment is crucial in ensuring that both MA plans—administered by private insurance companies but funded by the government—and traditional FFS Medicare operate under consistent guidelines, reducing discrepancies and improving the overall efficiency of the Medicare system.
These changes are part of CMS’s broader effort to modernize the risk adjustment framework, making it more reflective of today's healthcare landscape and ensuring that funds are allocated efficiently to support necessary patient care without incurring unnecessary costs.
The new V28 model, which will fully replace the V24 model after a 3-year phase-out, will fully take effect in 2026. What should providers be aware of today to prepare for these changes?
|
3-Year Phase Out Plan for V24 to V28 |
|
|
2024 |
V24 - 67% V28 - 33% |
|
2025 |
V24 - 33% V28 - 67% |
|
2026 |
V28 - 100% |
The significant changes in V28 are:
|
Comparisons Between V24 and V28 |
|
|
Model V24 |
Model V28 |
|
ICD-9-CM |
ICD-10-CM |
|
86 HCC categories |
115 HCC categories |
|
9,797 HCC codes |
7,770 HCC codes |
|
Additional 268 diagnosis codes mapped to HCCs |
|
The shift to V28 of the risk adjustment model introduces the removal of 2,027 ICD-10-CM diagnostic codes from the existing HCC set (American Physician Groups, 2023). This change is expected to result in a potential 17%+ revenue loss for some organizations, assuming an even distribution of the impacted codes across patient populations. However, the actual financial impact may vary based on the frequency of these codes in an organization's coding practices.
At the same time, V28 introduces several important updates. It expands high-RAF (0.341) dementia HCC categories (HCC 125, 126, 127), and maintains capture opportunities of payable substance use disorders and psychiatric disease groups, providing continued reimbursement potential in these areas (CMS, Pinnacle). This is partly due to ICD-10-CM’s improved specificity; what required multiple codes under ICD-9-CM can now be described with a single, more specific code.This refinement in specificity not only streamlines coding but also enables more informed decision-making, potentially leading to enhanced diagnostic accuracy (AHIMA, 2024).
While the reduction in diagnostic codes might initially suggest potential revenue loss, the refinement in coding specificity and the expansion of high-RAF dementia categories offer significant opportunities for precise risk adjustment. This change aligns with industry standards for enhanced data capture and cost prediction. Understanding the shift to more specific ICD-10-CM codes is crucial for grasping how V28 affects dementia coding and overall risk adjustment.
Considering that dementia is widely underdiagnosed within the population, there’s an opportunity for healthcare providers to minimize this gap, reach underserved patient populations, and receive adequate funding coverage to address these patients’ needs.
|
Changes to Dementia Coding Between V24 and V28 |
|
|
Dementia was classified as either:
|
Dementia is classified based on severity:
Each of these new dementia HCCs has a RAF value of 0.341. |
In summary, there are two major shifts with V28 that healthcare providers should keep in mind in the context of population health management and dementia care.
For example, previously, diagnosing early-stage dementia might have required multiple codes to capture various symptoms and stages. Now, with expanded categories under V28, providers can use a single, more comprehensive code to capture mild or moderate dementia stages. This streamlined approach allows for more accurate coding and can improve reimbursement by reflecting the true complexity of the patient’s condition.
It’s clear through regulatory and policy changes that the US government is prioritizing cognitive healthcare. There’s greater attention being placed on cognitive conditions as the population ages, and more resources are now available for disease management. For example, the CMS already requires that providers screen for cognitive impairment during Annual Wellness Visits, and provides reimbursement for these routine appointments.
Creyos Health aligns closely with these evolving priorities.The platform supports the incentivization of routine cognitive testing which contributes to better patient outcomes by enabling:
Integrating Creyos Health into your practice can streamline your approach to cognitive healthcare and keep you ahead of the curve with evolving regulations.
According to the Alzheimer’s Association, nearly 11% of adults over 65 have Alzheimer’s disease (not including other dementias) and yet only 4–6% of this demographic are captured with a dementia diagnosis (Sternin, Burns, & Owen, 2019). With better dementia screening tools and more expanded coding categories, providers can more accurately reflect the prevalence of Alzheimer’s disease and other types of dementia—possibly doubling their capture rate—and receive appropriate reimbursement for the complex care these patients require.
As 2026 approaches, healthcare providers will need to stay up to date with the regulatory changes and adjust to the adoption of V28 practices. Below, we outline a few key steps that will continue to be important in this transition.
Until V28 takes full effect in 2026, providers will have to manage two HCC models. Health systems and practices can manage this transition by identifying the top HCCs that apply to their patient population. For example, if seniors comprise a significant portion of a practice’s patient population, it may be helpful to keep both the V24 and V28 HCC codes for dementia on hand, while transitioning to the new model.
Accurate risk adjustment has always relied on clear and specific documentation. Practices should invest in technology that allows them to capture detailed insights into a patient’s cognitive performance and more accurately categorize conditions based on severity in the V28 model.
Tools like Creyos can support this effort by providing comprehensive assessments that align with the latest risk adjustment requirements.
During this transition, consider using both V24 and V28 models to calculate risk models. For example, in 2025, you might find it helpful to determine the risk score by combining 33% of the adjusted V28 CMS-HCC model risk score with 67% of the adjusted V24 CMS-HCC model risk score.
As the need for dementia care increases and is incentivized by changes like the V28 model, healthcare systems can benefit from more effective dementia screening tools. Traditionally, the MoCA or MMSE are used to screen for dementia, but these tests are suited for detecting only more severe cases and often require additional administration effort (such as manual uploads to patient records).
The Creyos Dementia Protocol combines cognitive, functional, and behavioral testing to provide information about symptoms of mild cognitive impairment and dementia. It includes screening, assessment, care planning and tracking.
Traditional dementia screeners detect only more severe cognitive impairment and later-stage disease progression (Sternin et al., 2019). With the transition to V28 and coding categories that include mild and moderate levels of impairment, new tools are needed that can support earlier detection.
Creyos Health was designed to assess cognitive ability more conveniently and in greater detail compared to traditional tools. In one study of adults over 62 years old, the MoCA could only classify 72% of participants as unambiguously impaired or unimpaired. Creyos cognitive task scores were correlated with MoCA scores, but provided additional information to help determine each participant’s level of impairment, increasing classification to 92% (Sternin et al., 2019).
Built for better detection, diagnosis, and documentation, Creyos enables:
While changes to the V28 risk adjustment model may have prompted some concern among providers about a reduction in reimbursement, we see these changes as a shift in priorities that reflects emerging patient needs. With greater demands for cognitive care, for example, we see policy and coding requirements shifting in ways to incentivize and support closing current gaps in dementia detection.
With the right steps—keeping track of risk adjustment changes, investing in tools that allow for better screening and documentation, and introducing routine cognitive care—providers can achieve both better patient outcomes and practice sustainability.
The HCC model version 28, or V28, is a new risk adjustment strategy designed to better reflect utilization, cost, and diagnostic patterns. CMS introduced this new model to improve payment accuracy and more closely align coding and reimbursement processes for Medicare Advantage (MA) plans and fee-for-service Medicare.
The most significant changes to V28 include using the ICD-10-CM as reference, the expansion to 115 HCC categories, the reduction to 7,770 HCC codes, and the addition of 268 diagnosis codes mapped to HCCs.
The new HCC model version 28 (V28) will fully go into effect in 2026, replacing the V24 model which has been in use since 2020. It will transition in phases between 2024 to 2026. In 2024, the breakdown is 67% - V24 and 33% - V28. In 2025, the breakdown is 33% - V24 and 67% - V28. And in 2026, V28 will be fully (100%) in use.