AI in HCC Risk Adjustment Coding

The CMS-HCC model predicts each Medicare Advantage enrollee's expected cost from demographic factors and from diagnosis codes grouped into Hierarchical Condition Categories. The result is a risk adjustment factor (RAF) that scales payment to the plan. Hierarchies mean that when related conditions of different severity are coded, only the most severe category in that family counts. Diagnoses reset every calendar year, so a chronic condition must be documented again each year. It must also come from a face-to-face encounter with an acceptable provider type. Diagnostic radiology reports, for example, do not qualify. CMS phased in a revised model, known as V28, over 2024 through 2026. It restructured the categories and removed many diagnosis codes from payment, which changed which findings matter. AI tools read clinical notes, find mentions of conditions, check whether each one is current, negated or historical, map them to ICD-10-CM codes and then to HCCs, and link each finding to supporting text. Coders review the suggestions. That review matters because the most common AI error is to treat a mention as a diagnosis. Problem lists, medication lists, family history and phrases like "history of" do not show that a condition was evaluated or treated at the visit. Audit risk is real. CMS conducts Risk Adjustment Data Validation (RADV) audits, and a 2023 rule allowed extrapolating audit findings across a contract starting with payment year 2018. OIG reports have questioned diagnoses reported only through chart reviews or in-home health risk assessments. The Justice Department has brought False Claims Act cases alleging that plans used chart reviews only to add codes, without deleting unsupported ones. A frequent misconception is that MEAT (Monitor, Evaluate, Assess or Address, Treat) is a CMS regulation. It is an industry convention for auditing. The actual requirement is documentation that supports the code under ICD-10-CM guidelines.