The Centers for Medicare and Medicaid services (CMS) implemented the Risk Adjustment Payment System (RAPS) program as a way to determine a Medicare Advantage member’s premium on a prospective basis. While RAPS has gone through several changes over the years, the goal is to pay MA and Prescription Drug Plans (PDPs) accurately and fairly by adjusting payment for members based on demographics and health status.

Understanding Medicare Risk Adjustment Best Practices

To properly estimate what dollars are required on a member by member basis, over 17,000 ICD-9s (and ICD-10s) have been analyzed and nearly 3,000 of those have been cross-walked to 90+ Hierarchical Condition Categories (HCC). Each of the HCCs have a value attached to them payment model. When those values are added t