I love to learn as well and this discussion was very interesting. So I started to do some research and found out that the CMS-HCC was implemented in 2004. I included a brief paragraph or two from the CMS website on this......
The CMS hierarchical condition categories (CMS-HCC) model, implemented in 2004, adjusts Medicare capitation payments to Medicare Advantage health care plans for the health expenditure risk of their enrollees. Its intended use is to pay plans appropriately for their expected relative costs. For example, MA plans that disproportionately enroll the healthy are
paid less than they would have been if they had enrolled beneficiaries with the average risk profile, while MA plans that care for the sickest patients are paid proportionately more than if they had enrolled beneficiaries with the average risk profile.
Although this Affordable Care Act legislative mandate for an evaluation of the CMS-HCC risk adjustment model is new, the evaluation process is well established. CMS conducts comprehensive evaluations of its CMS-HCC model on a regular basis, including evaluating the model on the dimensions specified in the Affordable Care Act.
