Key Takeaways
- Risk adjustment coding captures a patient’s health status through ICD-10-CM diagnosis codes that map to Hierarchical Condition Categories (HCCs), determining Medicare Advantage payments based on patient complexity.
- MEAT criteria (Monitored, Evaluated, Assessed, Treated) is the documentation standard that validates every HCC code. Even one MEAT element supports a diagnosis for risk adjustment.
- RAF scores drive reimbursement. A Risk Adjustment Factor score of 1.0 represents the average Medicare beneficiary. A score of 1.25 generates 25% higher capitation payments.
- Annual recapture is mandatory. Chronic conditions must be documented each calendar year. Last year’s diagnosis does not count this year unless recaptured.
- RADV extrapolation is currently paused following a September 2025 court ruling. Organizations should use this window to strengthen HCC coding practices.
What Is Risk Adjustment Coding?
Risk adjustment coding is the methodology that assigns ICD-10-CM diagnosis codes to patient encounters to capture health status for value-based payment models. Unlike fee-for-service coding, which focuses on procedures, risk adjustment coding documents the full scope of chronic conditions affecting patients [1].
The hierarchical condition category (HCC) model groups diagnosis codes into payment categories based on clinical similarity and expected costs. Each HCC contributes to a patient’s Risk Adjustment Factor (RAF) score, which determines how much Medicare Advantage plans receive for managing patients. Accurate HCC coding ensures healthcare organizations receive appropriate reimbursement for patients with complex conditions while supporting better care coordination for all patients.
How Does the HCC Risk Adjustment Model Work?
The Centers for Medicare and Medicaid Services (CMS) developed the CMS-HCC model to predict healthcare costs based on documented diagnoses. The current hierarchical condition category model includes approximately 115 HCC categories that group over 9,500 ICD-10-CM diagnosis codes [1].
Providers document face-to-face encounters with specific diagnosis codes for all conditions requiring management. Coders assign ICD-10-CM codes to the highest specificity supported by documentation. Diagnosis codes map to HCCs, where only the most severe diagnosis within related condition groups counts toward the RAF score. Patient HCCs combine with demographic factors to produce a Risk Adjustment Factor score that determines capitation payments.
What Is MEAT Criteria in HCC Coding?
MEAT is an acronym representing the four factors that establish a diagnosis during a patient encounter and validate documentation for hierarchical condition category coding.
- Monitored means tracking signs, symptoms, disease progression or regression for patients. Examples include reviewing blood glucose logs or monitoring weight for patients with CHF.
- Evaluated means analyzing test results, medication effectiveness, and treatment response for patients. Examples include reviewing A1c results with patients or assessing response to medications.
- Assessed or Addressed means discussion, record review, counseling, and documenting condition status for patients. Examples include noting that depression is stable or that COPD status is unchanged.
- Treated means prescribing medications, surgical interventions, or specialist referrals for patients. Examples include continuing metformin or referring patients to cardiology.
Only one MEAT element is required to support a diagnosis for HCC coding purposes. However, documenting multiple MEAT elements strengthens audit defensibility and demonstrates active clinical management of patients [2].
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What Is the Current Status of RADV Extrapolation?
A federal court ruling in September 2025 significantly changed the RADV audit landscape. Judge Reed O’Connor of the Northern District of Texas vacated the 2023 CMS RADV Final Rule that would have allowed extrapolation of audit findings across entire contract populations [3].
The court found that CMS violated the Administrative Procedure Act by performing what the judge termed a “surprise switcheroo” in its justification for eliminating the fee-for-service adjuster. This means CMS can no longer use extrapolation to calculate overpayments for payment years 2018 through the present.
However, this ruling should be viewed as a preparation window rather than permanent relief. CMS may appeal, initiate new rulemaking, or continue non-extrapolated audits. Accurate HCC coding and MEAT documentation remain critical because individual diagnosis validation continues [4].
What Is the NO UPCODE Act?
The No Unreasonable Payments, Coding, or Diagnoses for the Elderly Act (NO UPCODE Act, S.1105) was introduced in March 2025 by Senators Bill Cassidy (R-LA) and Jeff Merkley (D-OR). This bipartisan legislation proposes significant changes to risk adjustment [5].
The bill includes three key provisions. First, CMS would use two years of diagnostic data instead of one year when determining payments. Second, diagnoses collected from chart reviews and health risk assessments would be excluded unless confirmed through clinical encounters. Third, CMS would evaluate and publicly report differences in coding patterns between MA plans and traditional Medicare providers [6].
AARP endorsed the legislation in July 2025. For HCC coding teams, passage would fundamentally change workflows and potentially reduce the value of retrospective chart review programs [7].
What Are FY2026 ICD-10-CM Updates?
CMS released significant updates to ICD-10-CM codes effective October 1, 2025, including 487 new codes, 38 revisions, and 28 deletions. Key changes affecting HCC coding for patients include new codes for diabetes remission status, expanded social determinants of health Z-codes, and the deletion of the single multiple sclerosis code (G35).
These annual updates require HCC coding teams to update processes and retrain coders. For complete details, see: 2026 ICD-10-CM Updates for Medicare Advantage.
Why Does Annual Recapture Matter?
CMS requires that chronic conditions for patients be documented each calendar year to count toward risk adjustment. A patient’s RAF score resets every January 1, so diagnoses documented for patients in previous years do not carry forward automatically.
This annual recapture requirement is the most commonly missed element in HCC coding programs. Even stable chronic conditions for patients like diabetes, COPD, or heart failure require fresh documentation each year to maintain accurate RAF scores.
Annual recapture requires a face-to-face encounter with an approved provider, documentation demonstrating at least one MEAT element for patients, a specific diagnosis coded to the highest ICD-10-CM specificity, and an encounter occurring within the calendar year. Common failures include assuming stable diagnoses for patients do not need documentation and missing December deadlines [2].
What Are Common Pitfalls in Risk Adjustment Coding?
Three systematic failures drive documentation gaps in HCC coding programs.
Nearly half of patients have chronic conditions missing from their documentation. Bipolar disorders, asthma, COPD, diabetes, and morbid obesity frequently go undocumented for patients or lack MEAT evidence. When diagnoses are missing from patient charts, RAF scores understate true complexity.
Generic diagnosis codes fail to capture complexity for patients. HCC coding requires specificity like “major depressive disorder, recurrent, moderate” rather than “depression, unspecified” for patients with mental health conditions.
A problem list showing diagnoses provides no MEAT evidence for patients. Medical records must demonstrate active management of patients through medications, test results, assessments, and treatment modifications.
Next Steps
Risk adjustment coding determines organizational financial health and patient care quality. The current regulatory landscape, including the RADV extrapolation pause and pending NO UPCODE Act legislation, creates both opportunity and urgency.
Use this window to strengthen documentation practices and ensure MEAT compliance across all HCC codes. Every uncaptured diagnosis reduces resources for managing complex patients.
Contact our risk adjustment experts for a confidential assessment of your program’s documentation quality and HCC capture rates.
Frequently Asked Questions
Risk adjustment coding assigns ICD-10-CM diagnosis codes to patient encounters to capture health status for value-based payment models. The CMS-HCC model calculates RAF scores that determine Medicare Advantage payments based on complexity.
MEAT stands for Monitored, Evaluated, Assessed, or Addressed, and Treated. These documentation elements establish a diagnosis during a patient encounter and validate HCC codes for risk adjustment programs.
RAF scores combine demographic factors with the sum of HCC weights for documented diagnoses plus disease interaction factors. A score of 1.0 represents the average Medicare beneficiary. Higher scores generate higher capitation payments.
CMS requires chronic diagnoses to be documented each calendar year. RAF scores reset annually, so failing to recapture conditions results in lower reimbursement despite unchanged complexity.
Sources
[1] CMS, “Risk Adjustment,” Centers for Medicare and Medicaid Services
[4] Healthcare Dive, “Judge vacates Medicare Advantage audit rule in win for industry,” September 2025
[5] U.S. Congress, “S.1105 – No UPCODE Act,” 119th Congress
[7] AARP, “AARP Endorses Bill to Stop Medicare Advantage Upcoding,” July 2025
