Guided Notes
Risk Adjustment & HCC Coding
How Medicare Advantage and ACOs use diagnosis codes to predict cost — HCC models, RAF scores, hierarchies, MEAT documentation, annual recapture and RADV audits.
What is risk adjustment?
Slide 1 / 5Health plans that take a fixed payment per member (e.g. Medicare Advantage, ACA plans, ACOs) are paid more for sicker members and less for healthier ones. Risk adjustment predicts each person's expected cost from: • demographics (age, sex, Medicaid eligibility, disability, institutional status), • diagnosis codes documented during the year, grouped into Hierarchical Condition Categories (HCCs).
The result is a Risk Adjustment Factor (RAF) score — 1.0 is average expected cost.