Risk Adjustment models are used to calculate risk scores used in predicting average beneficiaries healthcare expenditures. Currently Medicare Advantage and Prescription Drug programs include a risk adjustment as a component of the bidding and payment process to standardize bids, compare bids, and adjust plan payments. If you are not familiar of risk adjustment or HCC codes, it is time to get on board. While this may seem new to some, risk adjustment models have actually been around for a while, beginning with the Balanced Budget Act of 1997 (BBA), when they mandated the use of a risk adjustment payment methodology. Incorporating information on beneficiaries’ health status, it was required to be implemented no later than January 2000.
Initially the data was only used from inpatient stays, and later they incorporated data from additional sites of care. ESRD risk adjustment was implemented at 100% in 2005. Part D risk adjustment was implemented at 100% in 2006. Risk adjustments and Hierarchical Condition Categories and codes (HCC) codes were cross walked to ICD-10 codes for dates of service on or after October 1, 2015, and are the current method of reporting data.
Find-A-Code offers a tool used for calculating risk scores using HCC measures. The Risk Calculator has different versions available depending on the date of service, (including the ESRD calculator and Rx) using ICD-9 and ICD-10. This tool is the first known risk calculator available and is used by instructors teaching risk adjustments.
Capturing patient’s health status and relevant conditions with risk adjusted HCCs (Hierarchical Condition Codes) assist CMS when tracking chronic conditions to help predict future healthcare needs, and is currently being used as a funding methodology. The idea is to risk adjust plan payments based on health status and demographic characteristics of an enrollee.