Breakdown of the CMS risk-adjustment process:
Demographics + Diagnosis/Diagnoses = Risk Adjustment Factor (RAF) Score
Demographics include:
● Age
● Gender
● Whether the individual lives in the community or in a skilled nursing facility
● Whether the individual is enrolled in Medicare, Medicaid, or dually eligible for both
● Programs
Diagnosis/Diagnoses:
● Diagnosis/diagnoses are recorded using HCC codes
● The codes are based on specific ICD-10 codes
● Medical conditions are hierarchically weighted within the HCC categoriesDetermining Risk Adjustment Factors
● RAF values are assigned to HCCs
● RAF score for HCC is higher if the patient is sicker
● RAF values are additive
● RAF score of baseline demographics is < 1 (Source: American Academy of Family Physicians)
The HCC coding process assigns a weight to each condition. These weights, combined with demographic factors, determinethe HCC score. High scores mean that a patient has more complex and serious conditions and will use more health services,resulting in higher costs in the future.