<aside> 💡 CMS has implemented Risk Adjustment since year 2000, and the latest revision of this chapter was in 2014.
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<aside> 📔 Table of Contents
(Rev. 114, Issued; 06-07-13, Effective: 06- 07-13, Implementation: 06-07-13)
This manual chapter addresses the policies and operations related to the data collection for, calculation of, and use of risk scores in Part C and Part D payments through 2011. For detailed information on payment policies and formulas, refer to Chapter 8 for Part C payment (a chapter for Part D payment is forthcoming).
CMS risk adjusts Part C payments made to Medicare Advantage (MA) plans and Program of All Inclusive Care for The Elderly (PACE) organizations, and Part D payments made to Part D sponsors, including Medicare Advantage Prescription Drug plans (MA-PDs) and standalone Prescription Drug Plans (PDPs).
(Rev. 114, Issued; 06-07-13, Effective: 06- 07-13, Implementation: 06-07-13)
Risk adjustment allows CMS to pay plans for the risk of the beneficiaries they enroll, instead of an average amount for Medicare beneficiaries. By risk adjusting plan payments, CMS is able to make appropriate and accurate payments for enrollees with differences in expected costs.
Risk adjustment is used to adjust bidding and payment based on the health status and demographic characteristics of an enrollee. Risk scores measure individual beneficiaries’ relative risk and risk scores are used to adjust payments for each beneficiary’s expected expenditures. By risk adjusting plan bids, CMS is able to use standardized bids as base payments to plans.