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article highlights
- In OIG audits of high-risk diagnosis codes, about 70% of the codes reviewed weren't supported by the medical record (1). For health systems in risk contracts, that means repayment and legal exposure.
- Defensible HCC coding starts with provider documentation that meets MEAT criteria and captures chronic conditions at the right specificity every calendar year, now under the fully phased-in V28 model.
- Hold every submitted HCC to one standard: can your team show the documentation behind it? An audit trail that traces each code to its supporting documentation makes that answer fast.
HCC coding is how Medicare Advantage and other risk-based programs adjust payment for how sick patients are. CMS combines HCC-mapped diagnosis codes with demographic factors like age and sex to calculate a risk adjustment factor (RAF) score for each patient, which shapes what the plan is paid for that patient's care. If your health system takes on risk through Medicare Advantage contracts or an accountable care organization, your documentation and coding drive those scores.
That puts your records under federal scrutiny. In the HHS Office of Inspector General's audits of high-risk diagnosis codes, about 70% of the codes reviewed weren't supported by the medical record (1). Unsupported codes expose you to repayment, and undocumented conditions leave a patient's real complexity out of the score.
This guide explains how HCC medical coding works, what changed under CMS's V28 model, and what it takes to keep every HCC defensible.
What Is Hierarchical Condition Category (HCC) Coding?
HCC coding means reviewing a patient's medical record and identifying the diagnoses that map to a hierarchical condition category, a group of clinically related conditions that are costly to manage over time. Examples include diabetes, congestive heart failure, chronic obstructive pulmonary disease, and major depressive disorder (2).
CMS introduced its HCC model in 2004, and risk adjustment has grown as more payers move to value-based care (3). Because payment is tied to a patient's health status rather than a flat rate, plans and providers that care for sicker patients aren't penalized for it.
How HCC Coding Works
Only diagnoses from inpatient stays, outpatient visits, or face-to-face visits with a health care professional count (4). Medicare Advantage plans submit those codes to CMS as encounter data (4), while ACA individual and small-group plans are risk adjusted under a separate HHS-HCC model (5).
HCC Categories and ICD-10-CM Mapping
HCC coding relies only on ICD-10-CM codes. Unlike fee-for-service billing, it doesn't involve CPT® or HCPCS codes (2). Of the more than 70,000 ICD-10-CM codes in use, about 7,770 map to 115 HCCs under V28 (6), organized into 26 disease groups (7).
Risk Adjustment Factor (RAF) Scores
Each HCC carries a weight, and CMS combines those weights with demographic factors such as age, sex, and disability status to calculate a patient's RAF score. A score of 1.00 reflects average expected costs. Scores above 1.00 indicate a sicker patient, and scores below 1.00 indicate a healthier one (8).
Scores are additive, so unrelated qualifying conditions add together. They're also hierarchical, so when a patient has several diagnoses in the same disease family, only the most severe one counts toward the score (8).
The CMS-HCC Model and V28
V28 is CMS's current risk adjustment model. The previous model, V24, grouped ICD-10-CM codes into HCCs using category logic built on the older ICD-9 system. V28 rebuilds those categories around ICD-10-CM and uses more recent cost data (6). CMS phased it in over three years, and 2026 risk scores are the first calculated entirely under V28 (9).
Why HCC Coding Accuracy Matters
Inaccurate HCC medical coding cuts both ways. Undercoding leaves a patient's complexity out of the risk score, so payment falls short of the care you're providing. Overcoding, submitting conditions the documentation doesn't support, draws regulatory and legal scrutiny.
CMS conducts Risk Adjustment Data Validation (RADV) audits to check whether submitted codes are supported by the medical record. In January 2026, Kaiser Permanente affiliates agreed to pay $556 million to resolve False Claims Act allegations that they added diagnoses to inflate risk scores (10).
Documentation and the MEAT Criteria
A coder can only report a diagnosis as an HCC if the provider's note shows it was addressed during that encounter, not just carried over from a problem list. The documentation standard most organizations use for HCC coding is MEAT (11):
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Monitor: signs, symptoms, or disease progression
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Evaluate: test results or response to treatment
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Assess or address: ordering tests, counseling, or reviewing records
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Treat: medication, therapy, or another intervention
MEAT isn't a CMS regulation, and organizations and payers interpret it differently. I recommend writing down your own MEAT policy and applying it consistently.
Auto-populated data, like an imaging result pulled into the note, doesn't count unless the provider addresses it (12).
Common HCC Coding Challenges
Specificity
Specificity is one of the biggest HCC medical coding challenges. Many diagnoses have an unspecified version and a more detailed version that describes a complication or severity level, and often only the detailed version maps to an HCC. If the documentation doesn't capture that detail, your coders have to use the generic code (8).
Annual Recapture
Risk scores reset every year, so chronic conditions must be documented and reported at least once each calendar year to count (3). A condition that goes undocumented for a year drops out of the patient's score.
Retrospective Chart Reviews
Plans rely heavily on chart reviews and health risk assessments to add diagnoses after the fact. MedPAC estimates the two account for about half of overall Medicare Advantage coding intensity (13), and the practice has drawn scrutiny for overstating patient complexity.
Make Every HCC Defensible with Autonomous Coding
Under V28 and RADV, the standard for HCC coding should be simple: for every submitted HCC, your team can point to the documentation that supports it. That's also where AI should make coding more consistent, not less transparent.
Autonomous medical coding sits at the coding step, not the documentation step. Nym's autonomous medical coding engine assigns the ICD-10-CM diagnosis codes the provider's documentation supports, including HCC-mapped codes, and can be configured to apply your organization's MEAT policy to each diagnosis it codes. It doesn't suggest conditions the provider didn't document, and CDI work stays with your team. When documentation is ambiguous or incomplete, the engine routes the encounter to your coders with a flag explaining the issue.
Unlike black box AI solutions, Nym's engine provides a transparent audit trail for every code assignment, tracing each diagnosis to the supporting documentation and the guideline behind it. When a plan or auditor asks you to support a diagnosis, your team starts from that record instead of reconstructing the chart. Schedule a demo to see an audit trail for yourself.
Sources
- U.S. Department of Health and Human Services, Office of Inspector General. (14 December 2023). Toolkit To Help Decrease Improper Payments in Medicare Advantage Through the Identification of High-Risk Diagnosis Codes. Retrieved September 28, 2026, from https://oig.hhs.gov/reports/all/2023/toolkit-to-help-decrease-improper-payments-in-medicare-advantage-through-the-identification-of-high-risk-diagnosis-codes
- AAPC. (20 January 2024). What Is HCC Coding? Retrieved August 24, 2026, from https://www.aapc.com/resources/what-is-hierarchical-condition-category
- American Academy of Family Physicians. Hierarchical Condition Category Coding for Family Physicians. Retrieved September 28, 2026, from https://www.aafp.org/practice-operations/billing-and-coding/hierarchical-condition-category
- Ramsay, C., Jacobson, G., and Leonard, F. (26 January 2026). How Risk Adjustment Affects Payment for Medicare Advantage Plans. The Commonwealth Fund. Retrieved September 28, 2026, from https://www.commonwealthfund.org/publications/explainer/2026/jan/how-risk-adjustment-affects-payment-medicare-advantage-plans
- Kautter, J., Pope, G. C., Ingber, M., et al. (9 September 2014). The HHS-HCC Risk Adjustment Model for Individual and Small Group Markets under the Affordable Care Act. Medicare & Medicaid Research Review. Retrieved September 28, 2026, from https://www.cms.gov/mmrr/articles/a2014/mmrr2014_004_03_a03.html
- Goodlin, M. (28 September 2023). Risk Adjustment: Is Your Organization Ready For The Transition from V24 to V28? Rebellis Group. Retrieved August 24, 2026, from https://www.rebellisgroup.com/post/risk-adjustment-is-your-organization-ready-for-the-transition-from-v24-to-v28
- Greenwood, C. (20 March 2024). Adding M.E.A.T. To Documentation Supports HCC Assignment In Risk Adjusted Payment. Health Information Associates. Retrieved September 28, 2026, from https://hiacode.com/blog/adding-meat-and-hcc-assignment-in-risk-adjusted-payment
- AAPC. (29 January 2024). What Is Risk Adjustment? Retrieved August 24, 2026, from https://www.aapc.com/resources/what-is-risk-adjustment
- Centers for Medicare & Medicaid Services. (7 April 2025). 2026 Medicare Advantage and Part D Rate Announcement. Retrieved September 28, 2026, from https://www.cms.gov/newsroom/fact-sheets/2026-medicare-advantage-part-d-rate-announcement
- U.S. Department of Justice, Office of Public Affairs. (14 January 2026). Kaiser Permanente Affiliates Pay $556M to Resolve False Claims Act Allegations. Retrieved September 28, 2026, from https://www.justice.gov/opa/pr/kaiser-permanente-affiliates-pay-556m-resolve-false-claims-act-allegations
- Dick, M. (5 March 2018). Include MEAT in Your Risk Adjustment Documentation. AAPC. Retrieved August 24, 2026, from https://www.aapc.com/blog/41212-include-meat-in-your-risk-adjustment-documentation/
- Hakimi, R. (22 March 2024). The Business of Neurocritical Care: Understanding Risk Adjustment Factor (RAF) Scores and Their Impact on Reimbursement. Neurocritical Care Society. Retrieved September 28, 2026, from https://currents.neurocriticalcare.org/Leading-Insights/Article/the-business-of-neurocritical-care-understanding-risk-adjustment-factor-raf-scores-and-their-impact-on-reimbursement
- Medicare Payment Advisory Commission. (17 January 2025). Medicare Advantage program: Status report. Retrieved September 28, 2026, from https://www.medpac.gov/wp-content/uploads/2025/01/Tab-M-MA-status-report-January-2025-SEC.pdf
Frequently Asked Questions
What does HCC stand for in medical coding?
HCC stands for hierarchical condition category, a group of related diagnoses that reflects the expected cost of a patient's care. Risk-based programs such as Medicare Advantage use HCCs to adjust payment.
How do HCC codes affect reimbursement?
HCC-mapped diagnosis codes, combined with demographic factors such as age and sex, determine a patient's risk adjustment factor (RAF) score. That score shapes what a plan is paid for the patient's care, so inaccurate coding leads to underpayment or overpayment.
What is a RAF score?
A risk adjustment factor (RAF) score reflects a patient's expected healthcare costs. A score of 1.00 is average; higher scores indicate a sicker patient, and lower scores a healthier one.
What are the MEAT criteria in HCC coding?
MEAT stands for monitor, evaluate, assess or address, and treat. A diagnosis counts as an HCC only if the provider's note shows at least one, not just a diagnosis carried over from a problem list.
What is the difference between HCC coding and regular medical coding?
HCC coding relies only on ICD-10-CM diagnosis codes and shapes what a plan is paid to manage a patient's care. Fee-for-service coding also uses CPT® and HCPCS codes and determines what a provider is paid for specific services.
How often must HCC diagnoses be documented?
At least once every calendar year, even for chronic conditions. Risk scores reset annually, so a condition that isn't documented during the year drops out of the score.
