CRC Medicare Advantage Payment Methodology

Question 1

What is the primary purpose of risk adjustment in Medicare Advantage?

Accepted Answer

To ensure plans are paid appropriately based on enrollee health status

Answer

Risk adjustment ensures MA plans receive payments that reflect the actual health risk of their enrolled population.

Question 2

What does the CMS-HCC model use to predict?

Accepted Answer

Future healthcare expenditures

Answer

The CMS-HCC model predicts future healthcare expenditures based on demographic factors and documented chronic conditions.

Question 3

Which data source does CMS primarily use to calculate risk scores for MA plans?

Accepted Answer

Both FFS claims and encounter data submitted by MA plans

Answer

CMS uses both fee-for-service Medicare claims and encounter data submitted by MA plans to calculate risk scores.

Question 4

What is the 'normalization factor' in Medicare Advantage risk adjustment?

Accepted Answer

A factor applied to ensure average risk scores across the program equal 1.0

Answer

The normalization factor calibrates risk scores so that the average across all MA enrollees equals 1.0, keeping payments budget-neutral.

Question 5

What is the 'frailty adjuster' in Medicare Advantage risk adjustment?

Accepted Answer

An additional payment for enrollees in institutional settings

Answer

The frailty adjuster provides additional payment for institutionalized enrollees who have higher care needs not fully captured by HCCs.

(CRC) Certified Risk Adjustment Coder Practice Test