The CMS-HCC model is the primary risk adjustment model used to calculate risk scores for Medicare Advantage medical payments. Developed by the Centers for Medicare & Medicaid Services (CMS), this model helps estimate healthcare costs based on beneficiaries’ documented health conditions and demographic characteristics.
The CMS-HCC model plays an important role in Medicare Advantage reimbursement because beneficiaries have different healthcare needs and expected medical expenses. Accurate clinical documentation, appropriate ICD-10-CM coding, and compliant reporting help ensure that eligible health conditions are represented correctly.
Understanding the CMS-HCC model is essential for healthcare providers, medical coders, billing professionals, and healthcare administrators who work with Medicare Advantage plans. This guide explains how the model works, its role in 2026, and why accurate diagnosis coding matters.
What Is the CMS-HCC Model?
The CMS-HCC model stands for the Centers for Medicare & Medicaid Services Hierarchical Condition Category model. It is a risk adjustment methodology used to predict healthcare expenditures for eligible Medicare Advantage beneficiaries.
The model groups certain diagnosis codes into condition categories associated with expected medical costs. These categories, along with demographic and other applicable variables, contribute to a beneficiary’s risk score.
Key components of the CMS-HCC model include:
- Demographic information: Age, sex, and other variables specified by the applicable model.
- Documented medical conditions: Eligible diagnoses supported by appropriate clinical documentation.
- Condition categories: Groups of diagnoses associated with expected healthcare expenditures.
- Disease interactions: Certain combinations of conditions may affect the calculated risk score.
- Risk score calculation: A statistical process that estimates expected costs relative to a reference population.
A higher risk score generally indicates greater expected healthcare needs. However, a risk score is not a direct dollar amount and does not guarantee a specific payment to an individual physician or practice.
For official information, visit the CMS Risk Adjustment resource.
5 Key Facts About the CMS-HCC Model in 2026
1. The CMS-HCC Model Supports Medicare Advantage Payments
Medicare Advantage, also called Medicare Part C, is a program through which private insurance companies provide Medicare-covered benefits under contracts with CMS.
The CMS-HCC model helps CMS adjust payments to Medicare Advantage organizations according to the expected healthcare costs of their enrolled beneficiaries. This helps account for differences in health status across populations.
The model is not a universal risk adjustment system for every Medicare program. Other programs use specialized methodologies based on their specific payment requirements.
2. The 2024 CMS-HCC Model Is Fully Phased In for 2026
For payment year 2026, CMS has completed the phase-in of the 2024 CMS-HCC model for Medicare Advantage organizations other than Program of All-Inclusive Care for the Elderly (PACE) organizations.
The 2024 model incorporates updated diagnosis mappings and other methodological changes designed to improve how expected healthcare expenditures are estimated.
Healthcare organizations should distinguish between the model version and the payment year. Although the model is called the 2024 CMS-HCC model, it is used for Medicare Advantage payment calculations in 2026.
PACE organizations follow separate transition rules, so the same implementation approach does not apply to every organization.
For the official policy, review the CMS 2026 Medicare Advantage and Part D Rate Announcement.
3. Accurate ICD-10-CM Coding Is Essential
The CMS-HCC model relies on eligible diagnosis information. For a diagnosis to contribute to risk adjustment, it must meet applicable documentation, coding, and submission requirements.
Healthcare providers and coding teams should focus on:
- Complete and accurate clinical documentation.
- Appropriate ICD-10-CM code assignment.
- Compliance with applicable coding guidelines.
- Correct use of the relevant CMS diagnosis mappings.
- Timely submission of eligible diagnosis data.
Not every diagnosis code maps to an HCC category, and not every documented condition contributes to a risk score. Coding decisions must be supported by the medical record rather than by a desire to increase reimbursement.
4. Medicare Uses Different Models for Different Programs
Although the CMS-HCC model is central to Medicare Advantage medical risk adjustment, other Medicare programs use different models.
Medicare Advantage Part C: The CMS-HCC model supports medical expenditure risk adjustment.
Medicare Part D: The RxHCC model is used to account for expected prescription drug costs.
End-stage renal disease populations: Specialized ESRD risk adjustment models apply in relevant circumstances.
PACE organizations: Separate transition provisions apply to their risk adjustment calculations.
Understanding these differences helps healthcare organizations avoid applying the wrong model or assuming that the same rules apply across all Medicare programs.
5. Compliance and Documentation Reviews Help Reduce Errors
Incomplete records, unsupported diagnoses, inconsistent coding, and incorrect data submissions can create compliance and operational risks.
Healthcare organizations can strengthen their processes through regular documentation reviews, coding education, and appropriate internal audits.
Effective reviews should confirm that diagnoses are supported by the medical record and comply with the applicable CMS requirements. They should not encourage providers to report conditions that were not clinically established or appropriately documented.
How Does the CMS-HCC Model Work?
The CMS-HCC model follows a structured process to translate eligible demographic and diagnosis information into a risk score.
Step 1: Document the Patient’s Health Conditions
Healthcare providers document the conditions evaluated, monitored, assessed, or treated during patient encounters, following applicable clinical documentation requirements.
Step 2: Assign Appropriate ICD-10-CM Codes
Qualified coding professionals review the medical record and assign codes that accurately represent the documented conditions.
Step 3: Identify Eligible HCC Categories
CMS uses the applicable model’s diagnosis mappings to determine which diagnoses contribute to condition categories.
Step 4: Calculate the Risk Score
Eligible condition categories and demographic variables are used in the risk adjustment calculation. Certain condition combinations may affect the final score.
Step 5: Apply Applicable Payment Rules
The calculated risk score is incorporated into the relevant Medicare Advantage payment methodology. Final payments depend on additional program and payment factors.
This process highlights why clinical documentation and accurate coding are important to compliant risk adjustment.
CMS-HCC Model and Medical Billing: What Providers Should Know
Risk adjustment and medical billing are related, but they are not the same process. Medical billing generally involves submitting claims for healthcare services, while risk adjustment uses eligible data to estimate expected healthcare expenditures.
For medical practices serving Medicare Advantage patients, coordinated documentation and coding workflows can help improve administrative accuracy and reduce avoidable errors.
Healthcare organizations should consider the following practices:
- Maintain complete, accurate, and timely medical records.
- Train clinical and administrative staff on applicable documentation standards.
- Review coding workflows for inconsistencies.
- Follow current CMS risk adjustment policies and technical guidance.
- Maintain appropriate compliance and audit procedures.
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CMS-HCC Model vs. RxHCC Model
The CMS-HCC and RxHCC models serve different purposes within Medicare.
| Feature | CMS-HCC Model | RxHCC Model |
|---|---|---|
| Primary application | Medicare Advantage medical risk adjustment | Medicare Part D prescription drug risk adjustment |
| Main purpose | Estimate expected medical expenditures | Estimate expected prescription drug expenditures |
| Key data | Eligible diagnoses and demographic variables | Eligible information under the applicable Part D methodology |
| Payment context | Part C | Part D |
| 2026 considerations | 2024 model fully phased in for non-PACE organizations | Applicable 2026 Part D model and program-specific rules |
These models are not interchangeable. Healthcare organizations should refer to the relevant CMS technical documentation when determining the applicable rules.
Frequently Asked Questions About the CMS-HCC Model
What is the CMS-HCC model used for?
The CMS-HCC model is primarily used to adjust Medicare Advantage payments based on beneficiaries’ expected healthcare costs. It uses eligible diagnosis information, demographic factors, and other model variables to calculate risk scores.
Which CMS-HCC model is used in 2026?
For 2026, the 2024 CMS-HCC model is fully phased in for Medicare Advantage organizations other than PACE organizations. PACE follows separate transition rules.
Does every diagnosis increase a CMS-HCC risk score?
No. Only diagnoses that satisfy the applicable documentation, coding, eligibility, and submission requirements can contribute to risk adjustment. Some diagnoses do not map to an HCC category.
Is the CMS-HCC model used for Medicare Part D?
No. Medicare Part D uses the RxHCC model for prescription drug risk adjustment. The CMS-HCC model primarily supports medical risk adjustment under Medicare Advantage.
How can healthcare providers improve HCC coding accuracy?
Providers can strengthen coding accuracy by maintaining complete clinical records, following ICD-10-CM guidelines, educating staff, reviewing applicable CMS mappings, and conducting compliance-focused audits.
Does a higher risk score guarantee higher reimbursement?
No. A higher risk score generally represents greater expected healthcare costs, but it does not guarantee a particular payment amount. Payments depend on the applicable CMS methodology and other program-specific factors.
Conclusion
The CMS-HCC model is the primary risk adjustment model for Medicare Advantage medical payments. It helps CMS account for differences in beneficiaries’ expected healthcare costs using eligible diagnoses, demographic information, and other model variables.
In 2026, the 2024 CMS-HCC model is fully phased in for Medicare Advantage organizations other than PACE organizations, which follow separate transition rules. Medicare Part D and certain other populations use different risk adjustment methodologies.
For healthcare providers, accurate documentation, compliant ICD-10-CM coding, and reliable administrative workflows are essential to supporting appropriate risk adjustment. Staying informed about CMS policies can help practices strengthen compliance and improve operational efficiency.
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