RxHCC vs CMS-HCC: Two Models, One Member

If your organization participates in Medicare, you live under two risk adjustment models at once. The CMS-HCC model adjusts payment for medical costs under Medicare Advantage (Part C). The RxHCC model adjusts payment for prescription drug costs under Medicare Part D. Both are built and maintained by CMS, both use hierarchical condition categories, and both reward accurate diagnosis documentation — but they differ in important ways that affect how you code, document, and audit.

Purpose and Payment Linkage

CMS-HCC (Part C)

The CMS-HCC model predicts a beneficiary's expected medical costs — hospitalizations, physician visits, procedures — for Medicare Advantage plans. A member's CMS-HCC risk score directly scales the plan's monthly capitated payment from CMS. Higher documented acuity means higher revenue to care for sicker members.

RxHCC (Part D)

The RxHCC model predicts expected prescription drug costs. It applies to both Medicare Advantage Prescription Drug (MA-PD) plans and standalone Prescription Drug Plans (PDPs). RxHCC scores adjust the direct subsidy CMS pays for each enrollee, which is especially consequential now that the Inflation Reduction Act's Part D redesign has shifted more benefit-phase liability onto plans.

Condition Categories

Both models group ICD-10 diagnoses into condition categories, but the groupings are not identical. CMS-HCC categories are calibrated against total medical spending. RxHCC categories are calibrated against drug spending, so conditions with expensive pharmacotherapy — HIV, multiple sclerosis, rheumatoid arthritis, transplant, hepatitis C — carry substantial RxHCC coefficients even when their medical-side weight is modest. A condition that matters in one model may be weighted very differently in the other.

Data Sources

Both models run on diagnosis data, but the submission pipelines differ:

• CMS-HCC: diagnoses flow through the Risk Adjustment Processing System (RAPS) and the Encounter Data System (EDS) from medical claims and encounters.
• RxHCC: diagnoses come from the same encounter infrastructure, but the model's cost targets are built from Prescription Drug Event (PDE) records, and plan liability is reconciled against PDE data at year end.

Demographic and status factors also differ in weight. RxHCC includes distinct segments for low-income subsidy status, disability, and long-term institutionalization, because these factors strongly predict drug utilization.

Coefficients and Hierarchies

Both models are additive: each qualifying condition category contributes a coefficient, and demographic factors stack on top. Both also apply hierarchies — when a severe and a mild form of a related condition are both coded, only the more severe category counts. The hierarchy logic is conceptually identical but the category maps and coefficient values are model-specific and are recalibrated on their own schedules. CMS publishes both sets of coefficients and model software on its risk adjustment pages each year, finalized in the annual Rate Announcement.

Audit Exposure: RADV

Risk Adjustment Data Validation (RADV) audits historically focused on Part C diagnoses, but Part D risk adjustment data is subject to the same underlying validation obligations, and CMS has moved toward expanding audit scope and extrapolating overpayments. A diagnosis that cannot be supported in the medical record is a repayment risk in either model. Because the same chart often feeds both CMS-HCC and RxHCC scores, one documentation gap can create exposure on two payment streams simultaneously.

Why Plans Must Manage Both

For an MA-PD plan, total Medicare revenue is the sum of Part C and Part D payments — each adjusted by its own model. Managing only one leaves money and compliance risk on the table:

• Revenue accuracy: a member with well-documented medical conditions but poorly captured drug-relevant diagnoses is underpaid on the Part D side, even if the Part C score looks healthy.
• Compliance symmetry: documentation improvement programs that chase only CMS-HCC categories can create lopsided coding patterns that attract scrutiny.
• IRA pressure: with plans now bearing a larger share of catastrophic-phase drug costs, an accurate RxHCC score is no longer a minor adjustment — it is central to Part D bid strategy and financial viability.
• Provider alignment: point-of-care documentation, retrospective review, and suspect condition identification programs should be designed against both category lists at once, so every chart review yields value in both models.

The practical takeaway: treat CMS-HCC and RxHCC as one integrated risk adjustment program with two outputs, not two separate projects.

Talk to us

If you are trying to align your Part C and Part D risk adjustment workflows — or want to understand what the RxHCC model means for your organization — contact the CuraFi team at hello@curafi.com.

Frequently asked questions

Is RxHCC the same as CMS-HCC?

No. CMS-HCC adjusts Part C medical payments for Medicare Advantage; RxHCC adjusts Part D prescription drug payments. Both are CMS models using hierarchical condition categories, but with different category maps, coefficients, and cost targets.

Do the same diagnoses count in both models?

Often yes — the same encounter data feeds both models — but each condition may map to different categories and carry very different weights in each model.

Does RADV apply to Part D?

Part D risk adjustment data is subject to validation requirements, and CMS has been expanding audit activity. Unsupported diagnoses create overpayment exposure in both models.