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Post your toughest HCC questions for Holly and I to answer

Deb McEachern CPC

Staff member
HCC Moderator
HCC coders: post your toughest HCC questions here and Holly and I will come back and answer them for you.
Holly: I've had a lot of HCC coders ask me about Rx HCC's and exactly what these mean and how they differ from the non Rx HCC's. I thought you could speak most knowledgeably on this subject. What exactly are Rx HCC's? Thank you.

Holly Cassano

Staff member
HCC Moderator
70.4 - Prescription Drug Hierarchical Condition Categories (RxHCC)
(Rev. 114, Issued; 06-07-13, Effective: 06- 07-13, Implementation: 06-07-13)

Starting in 2006, with the implementation of the Part D program, CMS introduced a
second major HCC-based risk adjustment model. Created with the passage of the
Medicare Modernization Act (MMA) of 2003, the Medicare Part D Prescription Drug
benefit became the second major Medicare capitated payment system. CMS developed
the Part D RxHCC risk adjustment model to apply to monthly capitated payments to both
Medicare Advantage (MA-PDs) and standalone prescription drug plans (PDPs).

The Part D RxHCC risk adjustment model implemented in 2006 was developed using a structure
similar to the CMS-HCC model, in that it included demographic and diagnosis
information clustered into hierarchical condition categories. CMS obtains diagnoses for
all Medicare beneficiaries from either fee-for-service claims or Medicare Advantage
reporting. In 2011, CMS implemented an updated Part D RxHCC risk adjustment model,
incorporating program data derived from prescription drug event (PDE) data. The data
used to calibrate this updated model was more recent cost and utilization data, resulting
in a model that reflects more recent drug cost and utilization patterns.

70.5 - CMS RxHCC Risk Adjustment Model Compared with the CMSHCC
Risk Adjustment Model
(Rev. 114, Issued; 06-07-13, Effective: 06- 07-13, Implementation: 06-07-13)
This section describes the similarities and differences between the Part D RxHCC risk
adjustment model and the Part C CMS-HCC risk adjustment model.

70.5.1 - Model Similarities
(Rev. 118; Effective: ICD-10: Upon Implementation of ICD-10, ASC X12: January 1,
2012 (for ASC X12 5010); Implementation: ICD-10: Upon Implementation of ICD-10,
ASC X12: January 1, 2012 (for ASC X12 5010))

The CMS-HCC and the CMS RxHCC risk adjustment models are constructed and
calibrated using the same methodology and many of the same data sources.
Source of diagnoses: Individual ICD diagnosis codes, both for the calibration of the
models, and to calculate risk scores for payment, are taken from FFS claims and MAreported
diagnosis data.

Regression model to predict expenditures: The models for continuing enrollees and new
enrollees are calibrated using a multiple regression analysis of actual expenditures. Both
models predict benefit costs for which the plans are responsible for covering. The CMSHCC
model predicts full Part A and B Medicare expenditures.

The RxHCC model predicts those expenditures for which Part D sponsors are responsible, i.e., drug costs
excluding cost sharing amounts for which the enrollee or the government is responsible
for paying. This RxHCC model is sometimes referred to as the plan liability model, to
distinguish it from the total spending model, which has been calibrated for analytic
purposes only.

Additive and hierarchical model: The two models generate enrollee risk scores by
adding relative risk weights for individual risk markers that have been assigned to the
beneficiary. This allows more than one disease to impact the final risk score. Both of the
models use diagnostic hierarchies. Hierarchies prevent multiple diagnoses in the same
disease group from inappropriately increasing the risk score. In this way, someone with
metastatic cancer and breast cancer receives credit only for the former, rather than both.
This is clinically appropriate and lessens the impact of variations in diagnosis coding

Used to adjust capitated payment amounts: Risk adjustment is intended to adjust
capitated payment amounts to pay plans fairly and accurately, thereby decreasing
incentives for health plans to avoid enrolling sicker beneficiaries. Both of these models
adjust standardized payments for the underlying health status of the beneficiaries enrolled
in the plan. The RxHCC model adjusts the monthly Part D direct subsidy. The CMSHCC
model adjusts Part C monthly payments to Medicare Advantage plans and PACE

Risk scores are relative and reflect the standard benefit: Each beneficiary’s risk score is
calculated to estimate that specific beneficiary’s expected costs, relative to the average
beneficiary. For each model, a risk score of 1.0 reflects the Medicare-incurred
expenditures of an average beneficiary. An RxHCC risk score of 1.0 indicates the
beneficiary is expected to incur the average liability amount for prescription drugs when
covered by the standard Part D Medicare benefit. A CMS-HCC risk score of 1.0
indicates the beneficiary is expected to incur the average Medicare program expenditure
for Parts A and B services.

70.5.2 - Model Differences
(Rev. 114, Issued; 06-07-13, Effective: 06- 07-13, Implementation: 06-07-13)

While both the CMS-HCC and the RxHCC models use health status (diagnoses) to
predict expenditures, the total expenditures that each model is predicting are quite
different (medical versus prescription drug) and, therefore, may result in different
weights on similar HCCs, as well as different risk scores for an individual beneficiary.

Risk adjustment attempts to account for the differences in expenditures incurred by a plan
due to differences in the health status of the beneficiaries enrolled in the plan. Since the
impact of health status factors, and the benefit design, are different between Parts C and
D, two risk adjustment models have been designed.


Rx hcc means prescription related ,cms want predict next year plan ,how patient condition in next year n if cms want to pay more or not example if patient have diabetes in 2014 n patient will taking gabapentin like drug than cms will predict next year patient might have diabetes with menifestation than from they predict and increse patient payment for next year that is the rx hcc