How does Medicare Risk Adjustment work?
The Medicare risk adjustment system assigns a value or “risk score” to each beneficiary according to his or her age, gender, health status, and other factors. An individual beneficiary’s risk score in one year is based on diagnoses from the prior year. The agency makes periodic adjustments to the model based on analyses of costs for beneficiaries in the traditional Medicare program .These plans are approved and regulated by the Centers for Medicare & Medicaid Services (CMS) and the program undergoes an annual review process that makes policy changes and sets payment rates for the next year The MA risk adjustment model uses HCCs to assess the disease burden of its enrollees. Medicare Advantage plans have been using the Hierarchical Condition Category (HCC)/risk adjustment. HCC diagnostic groupings were created after examining claims data so that enrollees with similar disease processes. Accurate documentation of diagnoses by clinicians is a critical component of the risk adjustment process.