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What Have I Learned?

70 – Risk Adjustment Models- Overview

70.1 – Calibration of the CMS-HCC Risk Adjustment Models

70.2 – CMS-HCC Risk Adjustment Model

70.3 – End Stage Renal Disease (ESRD)

70.4 – Prescription Drug Hierarchical Condition Categories (RxHCC)

70.5 – CMS RxHCC Risk Adjustment Model Compared with the CMS-HCC Risk Adjustment Model

70 - Overview

The CMS-HCC risk adjustment models are used to calculate risk scores, which predict individual beneficiaries’ health care expenditures, relative to the average beneficiary. Risk scores are used to adjust payments and bids based on the health status (diagnostic data) and demographic characteristics (such as age and gender) of an enrollee. Both the Medicare Advantage and Prescription Drug programs include risk adjustment as a component of the bidding and payment processes.

<aside> 💡 CMS uses risk adjustment to: (1) Standardize bids so that each plan has a bid for the average Medicare beneficiary; (2) Compare bids based on populations with different health statuses and other characteristics; (3) Adjust plan payment based on the characteristics of the enrolled population.

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CMS has developed separate risk adjustment models for the Parts A and B benefits offered by plans under Part C and for the Part D benefits offered by prescription drug plans. Within each benefit, CMS also developed segments of the models for subpopulations with distinct cost patterns.

The Part C model has segments for the following subpopulations of beneficiaries: