Each year, the Centers for Medicare & Medicaid Services (CMS) updates the list of eligible CPT/HCPCS codes for risk adjustment. Some codes are added, while others are dropped. The latest updates for 2025 have been published and this presents a great opportunity to examine the types of codes that have been removed over the years and their potential implications.
Understanding the Dropped Codes
A closer look at historical data shows that approximately 50 codes per year are removed from risk adjustment eligibility. While this might seem concerning, it’s important to note that a significant number of new eligible CPT/HCPCS codes are added annually. Overall, the number of eligible procedure codes has been steadily growing.
Why Are These Codes Dropped?
The removal of codes from risk adjustment eligibility can happen for various reasons, but one primary factor is the prevalence of "temporary codes"—specifically, Category III codes for emerging technologies. These codes are initially introduced to track the usage of new medical procedures and innovations. However, once these procedures become more established or reassessed, their eligibility for risk adjustment may be reconsidered.
This means that at one point, claims for these emerging technology procedures were risk-adjustment eligible. However, once the codes are dropped, plans no longer receive risk-adjusted payments for these services, even if they continue to be widely used.
Financial Implications for Medicare Advantage Plans
One crucial aspect to consider is the financial impact of these changes. Many of the emerging technology codes that get dropped are associated with high-cost procedures. This creates a potential financial misalignment for Medicare Advantage (MA) plans, as they must continue covering these costly services without receiving the corresponding risk adjustment revenue that previously helped offset their costs.
This impact is especially significant for specialty Medicare Advantage plans that cater to populations with higher utilization of emerging technology procedures. Plans specializing in areas like advanced cardiac care, oncology, or neurological interventions may feel the financial strain more acutely. Without proper adjustments, the loss of risk adjustment revenue for these procedures could lead to increased financial pressure on plans serving high-risk populations.
How Are Medicare Advantage Organizations Adapting?
A key question arises: how do Medicare Advantage organizations track these added and dropped codes and assess their impact on balancing risk-adjusted capitation and expenditure?
Do MA plans have dedicated teams monitoring these changes?
How do they adjust their financial models when previously eligible codes are removed?
Are there strategic shifts in care management or reimbursement structures to account for these losses?
Final Thoughts
The evolution of risk adjustment eligible procedure codes is an ongoing process, reflecting advancements in medical technology, shifts in healthcare policy, and financial considerations within the Medicare Advantage space. As these changes continue, it’s critical for MA plans, healthcare providers, and policymakers to stay ahead of the curve and develop proactive strategies for managing their financial and operational impact.
What are your thoughts on these changes? How does your organization monitor and adapt to shifts in risk adjustment eligibility? Let us know in the comments!