CMS-HCC vs HHS-HCC: Key Differences for Coders

The Quick Answer

CMS-HCC (Centers for Medicare and Medicaid Services Hierarchical Condition Categories) is the risk adjustment model used for Medicare Advantage. It uses a prospective design — diagnoses captured in one year predict costs in the following year. HHS-HCC (Department of Health and Human Services Hierarchical Condition Categories) is the risk adjustment model used for ACA marketplace plans. It uses a concurrent design — diagnoses from the current plan year are used to calculate risk transfer for that same year. The two models differ in the number of condition categories, which ICD-10 codes map to payment HCCs, how hierarchies are structured, and how the resulting scores are used financially. Coders who work across both Medicare Advantage and ACA marketplace plans must understand these differences to code accurately in each context.

What Each Model Is For

CMS-HCC: Medicare Advantage Risk Adjustment

The CMS-HCC model is the foundation of Medicare Advantage (Part C) risk adjustment. CMS uses it to adjust capitated payments to Medicare Advantage organizations based on the predicted health expenditures of their enrolled beneficiaries. A sicker beneficiary population generates higher capitated payments; a healthier population generates lower payments.

The model produces a Risk Adjustment Factor (RAF) score for each beneficiary. That RAF score is multiplied by a base rate to determine the monthly capitation payment CMS sends to the MA plan. The current production model is V28, which CMS phased in beginning in payment year 2024 and is now fully active for 2026 payment -- the full model software and ICD-10 mapping tables live on the CMS risk-adjustment model software page.

Key characteristics of CMS-HCC:

HHS-HCC: ACA Marketplace Risk Adjustment

The HHS-HCC model is used for risk adjustment in the ACA individual and small group markets. Its purpose is different from CMS-HCC: instead of adjusting direct payments from the government, it calculates risk transfer payments between insurers. Plans that enroll higher-risk members receive transfer payments from plans that enroll lower-risk members. The goal is to neutralize the financial incentive for insurers to avoid sick enrollees, and both the HHS-HCC model parameters and annual payment notices are published through the Federal Register rulemaking portal.

The current HHS-HCC model was recalibrated for the 2025 benefit year using updated claims data, and those recalibrated coefficients remain in effect for 2026.

Key characteristics of HHS-HCC:

Structural Differences: A Side-by-Side Comparison

Prospective vs. Concurrent: Why This Is the Most Important Difference

The single most consequential difference between the two models for working coders is the timing mechanism.

CMS-HCC is prospective. A diagnosis captured during calendar year 2025 affects the beneficiary's RAF score for payment year 2026. This creates a one-year lag between coding and financial impact. It also means that conditions must be recaptured every year — a diabetes diagnosis from 2024 does not carry forward into the 2026 payment year automatically. If the condition is not documented and coded in 2025, it drops off the 2026 RAF score.

HHS-HCC is concurrent. A diagnosis captured during benefit year 2026 affects the risk score calculation for benefit year 2026. There is no lag. This means conditions coded during the plan year immediately affect the risk transfer calculation for that same year.

What this means for coders:

ICD-10 Mapping Differences Between the Models

This is where coders working both systems get tripped up. The same ICD-10-CM code can map to an HCC in one model and not the other, or map to different HCC categories with different severity levels. When you need to verify a specific code, cross-check it against the CMS ICD-10-CM code set before assuming a mapping exists in either model.

Codes that map in CMS-HCC but not HHS-HCC (and vice versa)

The HHS-HCC model covers a broader range of conditions than CMS-HCC because it was designed for a younger, commercially insured population with different cost patterns. Conditions like pregnancy, substance use disorders, and certain mental health diagnoses have more granular representation in HHS-HCC.

Examples of mapping divergences:

Codes that map to different severity levels

Even when a condition maps to an HCC in both models, the severity tier can differ. A diabetes code might map to a high-severity HCC in CMS-HCC but a moderate-severity HCC in HHS-HCC (or the reverse) because the cost implications of that condition differ between the Medicare and commercial populations.

Diabetes example:

Chronic kidney disease example:

Payment Mechanics: RAF Scores vs. Risk Transfer

How CMS-HCC RAF Scores Work

In Medicare Advantage, the RAF score is an individual-level multiplier. Each beneficiary gets a RAF score based on their demographic factors (age, sex, dual eligibility, disability status) plus the sum of HCC coefficients from their coded conditions, minus any hierarchy adjustments, plus disease interaction terms.

RAF score formula (simplified):

Plans receive a specific dollar amount per beneficiary per month. Higher RAF scores mean higher payments. This is why MA plans invest heavily in coding accuracy and annual recapture — every HCC that drops off costs real revenue.

How HHS-HCC Risk Transfer Works

In the ACA marketplace, the math is different. Individual risk scores are calculated, but they are aggregated at the plan level and used to compute risk transfer payments between plans. A plan whose enrolled population has a higher average risk score than the state market average receives transfer payments. A plan whose enrolled population is healthier than average makes transfer payments.

Risk transfer formula (simplified):

The financial incentive structure is fundamentally different. In MA, every individual RAF point has a direct dollar value. In ACA, the value of coding is in the plan-level aggregate — moving the overall plan risk score relative to the state average determines the direction and magnitude of risk transfer.

V28 Changes to CMS-HCC and the 2025 HHS-HCC Recalibration

CMS-HCC V28 (Fully Active for 2026)

V28 was the most significant overhaul of the CMS-HCC model in its history, and AAPC's CMS-HCC model V28 explainer provides a coder-friendly summary of the structural differences. Key changes that coders working both systems must understand:

HHS-HCC 2025 Recalibration

The HHS-HCC model was recalibrated for the 2025 benefit year, with coefficients updated using more recent claims and enrollment data. Key points:

Hierarchy Differences

Both models use hierarchies to prevent double-counting within clinical families, but the hierarchy structures differ because the underlying HCC categories differ.

CMS-HCC V28 hierarchies tend to be organized around major organ systems and disease severity — for example, the diabetes hierarchy ranks diabetes with acute complications above diabetes with chronic complications above diabetes without complications. Only the highest-severity HCC in the hierarchy counts toward the RAF score.

HHS-HCC hierarchies are more granular and include hierarchy groups for condition families that do not appear in CMS-HCC (pregnancy, substance use, certain mental health categories). The hierarchy logic works the same way — higher-severity trumps lower-severity within a group — but the group definitions and the conditions within each group differ substantially.

Practical implication: A coder who knows the CMS-HCC hierarchy groups well cannot assume the same hierarchy structure applies to HHS-HCC. A condition that is trumped in one model may not be trumped in the other.

Practical Implications for Coders Who Work Both Systems

If you code for both Medicare Advantage and ACA marketplace plans, here are the operational differences that affect your daily workflow:

1. Code to the highest specificity regardless of model

Both models reward specificity, and both penalize unspecified codes. This principle is universal. Always code to the most specific ICD-10-CM code supported by the documentation.

2. Know which model you are coding for before you start

This sounds obvious but it matters. If you are coding a Medicare Advantage chart, you are working toward CMS-HCC V28 mappings. If you are coding an ACA marketplace chart, you are working toward HHS-HCC mappings. The target HCC categories, hierarchies, and financial implications are different. Do not assume that because a code maps to a payment HCC in one model, it does the same in the other.

3. Recapture cadence differs

For MA work, annual recapture is mandatory. Every chronic condition must appear in the current calendar year's coding or it falls off the next payment year's RAF score. For ACA work, there is no prospective lag, so the "recapture" pressure is about completeness within the current benefit year rather than year-over-year maintenance.

4. Demographic factors interact differently

A 70-year-old Medicare beneficiary's demographic component is calculated differently from a 35-year-old ACA enrollee's. The demographic weighting, age bands, and interaction terms between demographics and diagnoses differ between the models. Coders do not calculate these factors directly, but understanding that the same diagnosis has different financial weight in each model helps explain why coding priorities sometimes differ between MA and ACA assignments.

5. Submission and validation pathways differ

MA coding flows through encounter data submissions (and legacy RAPS in some contexts) to CMS. ACA coding flows through EDGE server submissions to CCIIO. The validation rules, submission formats, and error correction processes are different. Coders working both systems need to know which submission pipeline their work enters.

6. Audit frameworks differ

MA coding is subject to RADV (Risk Adjustment Data Validation) audits conducted by CMS. ACA risk adjustment data is subject to HHS-RADV, which has its own audit protocol, sampling methodology, and error adjudication process. The documentation standards for supporting a coded diagnosis are similar in principle (the diagnosis must be documented, supported, and clinically valid), but the audit mechanics and financial consequences differ. The OIG work plan comparing trends across the V24 and V28 CMS-HCC models is the current authoritative window into where federal oversight is focusing.

Quick Reference: Key Differences at a Glance

Using HCC Buddy Across Both Models

HCC Buddy's ICD-10 Encoder shows CMS-HCC V28 mappings for every ICD-10-CM code. When you look up a code, you immediately see whether it maps to a payment HCC under V28, which hierarchy group it belongs to, and where it sits in the trumping order. For coders working Medicare Advantage, this eliminates the guesswork in determining which codes carry RAF value.

The RAF Calculator models how adding or removing HCC codes changes a beneficiary's risk score under V28 demographic assumptions. Use it to see the marginal RAF impact of capturing a specific condition — particularly useful when prioritizing chart review targets for annual recapture.

For coders who also work ACA marketplace plans, understanding the CMS-HCC mapping for a given ICD-10 code provides a useful baseline, even though the HHS-HCC mapping may differ. The coding specificity skills and documentation assessment techniques transfer directly between both systems.

Frequently Asked Questions

Can the same ICD-10 code map to different HCCs in CMS-HCC and HHS-HCC?

Yes. The two models maintain separate mapping tables. A given ICD-10-CM code might map to HCC 37 in CMS-HCC and to a completely different HCC number in HHS-HCC, or map in one model but not the other. Always verify the mapping for the specific model you are coding for.

Do I need to code differently for MA vs. ACA charts?

You should always code to the highest specificity supported by the documentation regardless of the payer model. The ICD-10-CM code assignment should be the same for the same clinical documentation. What changes is your awareness of which codes carry HCC value in each model, which affects your chart review priorities and query strategy — not the code itself.

Why does CMS-HCC have fewer categories than HHS-HCC?

CMS-HCC was designed for the Medicare population, which is predominantly age 65 and older. Many condition categories that are significant cost drivers in a younger commercial population (pregnancy, pediatric conditions, certain mental health and substance use categories) are not major cost drivers in Medicare. CMS-HCC focuses on the conditions that best predict cost in its target population. HHS-HCC must account for a much broader demographic range and therefore includes more condition categories.

Will CMS-HCC and HHS-HCC ever merge?

There are no current plans to merge the models. They serve different populations, different payment mechanisms, and different policy objectives. CMS has indicated that the models will continue to be maintained and updated separately.