News & Information

How to calculate a risk score: In CMS’ calculation of the MA payment, CMS includes an additional factor in the risk score based on the original reason the beneficiary became legible for Medicare.

Below outlines the application of the factor based on original reason for entitlement.

Original Reason for entitlement Codes and Descriptions OREC Description Factor application

0. Beneficiary insured due to age CMS applies no additional actor.

1. Beneficiary insured due to disability CMS applies the same factor for OREC 1 and 3.

2. Beneficiary insured due to ESRD CMS applies no additional factor under the CMS-HCC model.

3. Beneficiary insured due to disability and current ESRDCMS applies the same factor for OREC 1 and 3.

Example (example uses the CMS-HCC risk adjustment model used in payment for years 2009 through 2011):

An 83 year old man who originally became entitled to Medicare as disabled is diagnosed withpneumococcal pneumonia (ICD-9 code 481, HCC112).
  • Originally insured due to disability, OREC = 1
  • Originally disabled, male = 0.168
  • Pneumococcal Pneumonia, Emphysema, Lung Abscess, HCC112 = 0.249 

                                 Risk Score = (demographics) + 0.168 + 0.249

Example (example uses the CMS-HCC ESRD dialysis risk adjustment model used in payment for years 2008 through 2011):

A 72 year old man who had originally been entitled to Medicare as disabled is diagnosed with End-Stage Renal Disease (ESRD) with renal dialysis status (ICD-9 code V451, HCC130).

  • Originally insured due to disability with current ESRD, OREC = 3
  • Male, originally entitled due to disability (non-ESRD) = 0.032
  • Renal Dialysis Status, V451, HCC130 = 0.0000

                                             Risk Score = (demographics) + 0.032 + 0.00

70.2.4-Original Reason for Entitlement Code (OREC)(Rev.114, issued; 6-07-13, Effective: 06-07-13, Implementation: 06-07-13)