What is medical risk adjustment?

A statistical process that takes into account the underlying health status and health spending of the enrollees in an insurance plan when looking at their health care outcomes or health care costs.

What is risk adjustment in Medicare Advantage?

Risk adjustment is used to adjust payments to Medicare Advantage Organizations (MAOs), Program of All Inclusive Care for the Elderly (PACE), certain demonstrations and Part D sponsors for the expected healthcare costs of their enrollees based on disease factors and demographic characteristics.

What is risk adjustment in US healthcare?

As defined by the Centers for Medicare and Medicaid Services (CMS), risk adjustment predicts the future health care expenditures of individuals based on diagnoses and demographics. Risk adjustment modifies payments to all insurers based on an expectation of what the patient’s care will cost.

What is Medicare risk Adjustment HCC coding?

Hierarchical condition category (HCC) coding is a risk-adjustment model originally designed to estimate future health care costs for patients.

How is risk adjustment calculated in healthcare?

Risk adjustment starts with gathering statistics—including patient demographics, diagnoses and professional encounter data. The data is used to assign each member in the plan a risk score. Risk scores are based on members’ active chronic medical conditions and the additional Medicare-approved services they require.

Why is risk adjustment important in healthcare?

Q: Why is risk adjustment important? A: Risk adjustment is designed to ensure that insurers receive appropriate premium revenue or compensation to cover medical costs for the enrollees they insure.

How is RAF score calculated?

The amount the government pays is calculated by a formula—multiplying the government’s “county rate” by the patient’s risk adjustment factor or RAF score. County rate x RAF score = Monthly capitation rate.

What is a RAF score?

Higher risk scores or RAF medical abbreviation “RAF score”, represent patients with a greater than average disease burden. Lower risk scores represent a healthier population view, but may also falsely indicate a healthy population when there is poor chart documentation or incomplete Medicare risk adjustment coding.

What is the role of risk adjustment in managing health care organizations?

In its simplest terms, risk adjustment ensures that the health conditions, health status, and demographics of the beneficiaries in a Medicare Advantage or an Affordable Care Act plan are accurately documented—and that the health plans managing those beneficiaries are adequately compensated for that management.

What is the function of risk adjustment?

Risk adjustment is a program designed to stabilize insurance markets by compensating plans based on the expected health- care costs of their members, taking into account the level of illness in that population.