A patient with type 2 diabetes and stage 4 chronic kidney disease can look healthy to a Medicare Advantage plan on January 1. All it takes is a year of visits where the kidney disease was managed but never made it into an assessment and plan.
Hierarchical Condition Category (HCC) coding is how those diagnoses turn into the risk score that sets what a plan is paid to cover that patient. Since January 2026 the score runs entirely on CMS’s V28 model, and CMS is auditing the records behind it at a pace it has never tried before.
Key Takeaways
- HCC coding maps ICD-10-CM diagnoses to condition categories that drive a patient’s risk adjustment factor (RAF) score.
- Payment year 2026 is the first year scored 100% on the V28 model, which has 115 payment HCCs and no longer pays for conditions such as protein-calorie malnutrition and stable angina.
- Chronic conditions reset every January 1 and have to be documented again in a qualifying face-to-face or video visit.
- A diagnosis holds up only when the note shows the provider monitored, evaluated, assessed, or treated it.
- CMS now audits every eligible Medicare Advantage contract each year, and plans pass record requests and recoupments down to practices.
What HCC Coding Is and Who It Pays
CMS pays Medicare Advantage plans a monthly amount for each member, and that amount rises or falls with how sick the member is expected to be. The CMS-HCC model is how CMS measures it. The model groups thousands of ICD-10-CM codes into condition categories, assigns each category a weight, and adds those weights to demographic factors like age, sex, Medicaid eligibility, and institutional status. The total is the patient’s RAF score, where 1.0 represents an average Medicare beneficiary.
Practices never submit HCCs. They submit diagnosis codes on claims and encounter data, the same way they always have. The plan collects those diagnoses, CMS maps them to categories, and the plan’s payment follows.
That’s why a practice billing fee-for-service can still be deep in HCC territory. Every Medicare Advantage patient you see adds diagnoses to a plan’s risk score, and many plan agreements tie shared savings, capitation, or quality bonuses back to it. CMS publishes the model software and the full ICD-10 mappings each year on its risk adjustment page.
How a Diagnosis Becomes a RAF Score
Take a 72-year-old patient whose note documents type 2 diabetes with diabetic chronic kidney disease, CKD stage 4, and chronic systolic heart failure. Coded correctly, that visit produces E11.22, N18.4, and I50.22. Each maps to its own payment HCC, and each adds to the score.
Two rules shape what happens next. The first is the hierarchy. Within a disease family only the most severe category counts, so a patient coded with both CKD stage 4 and CKD stage 3 is scored for stage 4 alone. The second is the interaction terms. The model adds weight when certain conditions appear together, such as diabetes with heart failure, because those patients cost more than either condition predicts by itself.
Specificity is where most of the money goes missing. N18.9, chronic kidney disease unspecified, doesn’t map to a payment HCC at all, while N18.4 does. The care in both cases is identical, and the only difference is the code.
What Changed with V28
CMS introduced the V28 model in its 2024 Rate Announcement and phased it in over three years. Risk scores were 33% V28 in 2024 and 67% in 2025. For payment year 2026 they are 100% V28, with no share of the older V24 model left to soften the change.
V28 raised the number of payment HCCs from 86 to 115, yet it stopped paying for more than 2,000 diagnosis codes that counted under V24. Several conditions that show up constantly in primary care were cut from payment entirely, including protein-calorie malnutrition, stable angina, atherosclerosis of the extremities without complications, and mild or unspecified major depression. The diabetes categories were also constrained to the same weight, so documenting a complication no longer raises the diabetes weight itself. The complication still matters, because conditions like diabetic CKD map to their own categories.
CMS projected average risk scores would fall a little over 3% under the new model. For a practice, the effect is that each condition still in the model has to carry more of the score, and its documentation has to be clean.
HCC Coding Guidelines Every Practice Should Follow
HCC coding follows the ICD-10-CM Official Guidelines for Coding and Reporting, the same rules as any outpatient diagnosis coding. What changes is how closely the documentation gets read, since every diagnosis on a Medicare Advantage claim is also a payment claim.
Support Every Diagnosis With MEAT
Coders and auditors use MEAT to test whether a condition was addressed at the visit. The note has to show the provider Monitored, Evaluated, Assessed, or Treated it. MEAT isn’t written into federal regulation, but it’s the test most plans and RADV reviewers apply.
A line reading “CHF, stable on furosemide 40 mg daily, recheck BMP in 3 months” passes. A diagnosis that sits only in the problem list, or in a templated past medical history, doesn’t.
Code to the Highest Specificity the Note Supports
Stage the CKD. Name the type and acuity of heart failure. Link diabetes to its complications using the ICD-10-CM “with” convention, which presumes a causal relationship between diabetes and conditions like CKD unless the provider documents another cause. Suspected, probable, and rule-out diagnoses can’t be coded in the outpatient setting, so they never count toward a risk score.
Recapture Chronic Conditions Every Calendar Year
HCCs reset every January 1. An amputation, dialysis dependence, or COPD counts toward next year’s payment only if it’s documented in an acceptable encounter during the current year. Diagnoses from 2026 dates of service set 2027 payments.
Many practices use the Annual Wellness Visit (G0438 and G0439) as the anchor for recapture because it brings the patient in once a year. The AWV alone doesn’t do the job. Each condition still needs MEAT documentation in that visit or another qualifying encounter.
Use Only Acceptable Encounters
Risk adjustment diagnoses have to come from a face-to-face encounter with an acceptable provider type. Diagnostic radiology doesn’t qualify, and neither do lab results or a standalone problem list. Telehealth counts only when it uses real-time audio and video, and CMS lists the qualifying services on its page for diagnoses from telehealth services. Audio-only visits don’t count for Medicare Advantage risk adjustment. Our breakdown of 2026 E/M and telehealth rules covers the billing side of those visits.
Where HCC Coding Accuracy Breaks Down
HCC errors run in both directions. Some leave real conditions out of the score. Others put in conditions the record can’t support, which is what RADV auditors are looking for. The patterns below account for most of both, and they’re the same habits that drive coding accuracy problems elsewhere in the claim.
- Coding active cancer for a patient who finished treatment years ago. With no current treatment and no evidence of disease, the correct code is usually a Z85 personal history code, which doesn’t risk-adjust.
- Coding an acute stroke (I63) at a follow-up office visit. Acute stroke codes belong to the initial episode of care. Afterward the patient gets an I69 sequela code for any lasting deficit, or Z86.73 when there is none.
- Reporting an acute myocardial infarction (I21) more than four weeks after the event, when it should be I25.2 for an old MI.
- Leaving CKD unstaged, heart failure unspecified, or diabetes complications unlinked when the note has the detail.
- Carrying diagnoses forward from a copied note with nothing showing the provider addressed them that day.
- Skipping status conditions like amputations, transplants, and ostomies because they don’t feel like active problems. They still need documenting every year.
Ambient AI documentation adds a newer wrinkle. Scribes capture more of what’s said in the room, which can surface conditions that used to go unrecorded, but they can also drop diagnoses into a note with no assessment or plan attached. Our piece on how AI scribes are changing medical coding covers what payers are watching for.
RADV Audits and What They Mean for Your Practice
Risk Adjustment Data Validation (RADV) audits are how CMS checks the medical records behind the diagnoses plans submit. For years CMS audited about 60 contracts annually and ran several years behind. On May 21, 2025, it announced it would audit every eligible Medicare Advantage contract each payment year, roughly 550 of them, and clear its backlog for payment years 2018 through 2024 by early 2026. CMS also planned to grow its medical coding staff from 40 to about 2,000 and to pull 35 to 200 records per contract depending on plan size.
Two details make this a practice problem and not only a plan problem. CMS can extrapolate audit findings across an entire contract starting with payment year 2018, so a small number of unsupported diagnoses can become a large recoupment. And plans get those records from the practices that wrote them. Many provider agreements, risk-based ones especially, let the plan recover payments tied to diagnoses the chart didn’t support.
When a plan sends a RADV record request, treat the deadline as fixed. Send the complete note for that date of service with the provider’s signature and credentials, because an unsigned or unauthenticated note is one of the most common reasons a diagnosis fails validation. RADV is one piece of a wider federal enforcement push, which our post on the Medicare Fraud Strike Force lays out.
HCC Coding Outside Medicare Advantage
CMS-HCC isn’t the only risk model in use. The ACA marketplace runs on HHS-HCC, a concurrent model, so diagnoses from this year affect this year’s payments. Medicare Shared Savings Program ACOs have their spending benchmarks adjusted with CMS-HCC scores, and many commercial and Medicaid managed care contracts tie shared savings to risk scores built on their own models.
The documentation standard barely moves from one model to the next. A note that would survive a RADV audit supports the diagnosis under any of them. For how these arrangements pay practices, see how value-based care reimbursement works.
Getting HCC Coding Right in Your Practice
Our medical billing team codes diagnoses to the specificity the record supports and flags notes that list a condition without an assessment or plan before the claim goes out. For practices with growing Medicare Advantage panels or new risk contracts, revenue cycle consulting can include documentation reviews and pre-audit chart checks against the V28 mappings.
Primary care groups carry most of the recapture work. Our primary care billing page covers how we support them, and our guide to primary care CPT codes covers the visits those diagnoses ride on.
HCC Coding FAQs
What does HCC stand for in medical coding?
HCC stands for Hierarchical Condition Category. It’s a grouping of related ICD-10-CM diagnosis codes that CMS and other payers use to predict a patient’s expected healthcare costs and adjust payments to match.
Do providers get paid directly for HCC codes?
No. Providers submit ICD-10-CM diagnosis codes, and CMS maps them to HCCs to set what it pays Medicare Advantage plans. Providers feel the effect through risk-based contracts, shared savings, capitation, and plan audits.
How often do HCC diagnoses need to be documented?
At least once every calendar year. HCCs reset on January 1, so a chronic condition that isn’t documented with MEAT support in a qualifying encounter during the year drops out of the next year’s risk score.
What is MEAT in HCC coding?
MEAT stands for Monitor, Evaluate, Assess or Address, and Treat. A diagnosis is considered supported when the note shows at least one of those actions at that encounter.
What changed in the V28 HCC model?
V28 increased payment HCCs from 86 to 115, removed more than 2,000 diagnosis codes from payment, and reweighted many categories. It became the only model used for Medicare Advantage risk scores in payment year 2026.
Do telehealth visits count for HCC risk adjustment?
Real-time audio and video visits can count when the service is on CMS’s list of acceptable telehealth services. Audio-only visits don’t count for Medicare Advantage risk adjustment.
What is a RAF score?
A risk adjustment factor (RAF) score is the sum of a patient’s demographic factors and HCC weights. A score of 1.0 reflects an average Medicare beneficiary, and higher scores mean higher expected costs and higher plan payments.
What happens if an HCC diagnosis fails a RADV audit?
CMS recovers the overpayment from the plan and can extrapolate the error rate across the whole contract. The plan may then recoup from the practice if the provider agreement allows it.
Co-Founder and COO of Medwave, bringing more than 30 years of hands-on experience in healthcare revenue cycle management, payer contracting, and medical credentialing.