Medicare Advantage Risk Adjustment Model Accuracy May Vary By Race

Health Payer Intelligence June 6, 2023
By Kelsey Waddill

The Medicare Advantage risk adjustment model consistently underestimated American Indian/Alaska Native beneficiaries’ costs.

The CMS-Hierarchical Condition Category (HCC) model used for Medicare Advantage risk adjustment may inaccurately estimate beneficiaries’ spending depending on the race or ethnicity of the beneficiary population, an Avalere study found.

The researchers tested the CMS-HCC model by Medicare fee-for-service Parts A and B files for 2019. The study considered all HCPCS codes in 2018 that could be risk-adjusted and claim spending. They partnered with Inovalon Inc. to access the CMS data and received funding from Arnold Ventures.

With this data, the researchers compared the actual FFS beneficiary spending to the projections the CMS-HCC community model made. They assigned a ratio to the results. A ratio of...

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