CMS Pub. 100-16, ch. 7, § 110

The risk adjustment process incorporates demographic and diagnostic data.

Demographic data includes:

• HICN, age, original reason for entitlement (e.g., disability), and Medicaid status

• Long Term Institutional status

• Primary payer information

• ESRD status

Diagnostic Data is used in risk score calculations and is obtained from both plans and

FFS providers.

• The Risk Adjustment Processing System (RAPS) Database contains the

diagnostic data submitted by Medicare Advantage plans, PACE organizations,

and cost plans.

• The National Medicare Utilization Database (NMUD) contains the diagnostic

data submitted by fee-for-service providers.

The Risk Adjustment System (RAS) calculates risk scores for all Medicare beneficiaries,

which are sent to the payment system for use in calculating payment.

Figure 1 illustrates the systems and databases that provide data used in risk score

calculations and ultimately in payment calculations in MARx. The components of the

process are described in further detail throughout the chapter.

Figure 1. Risk Adjustment Payment Process

MDS Long Term

Institutional File

Beneficiary

Diagnosis Input

File

Beneficiary

Demographic Input

File

Minimum Data Set (MDS)

(Long Term Institutional Data)

Common Medicare

Environment

(Demographic Data)

National Medicare Utilization

Database (NMUD)

(Fee-for-Service Diagnosis Data)

Risk Adjustment Processing

System (RAPS) Database

(Diagnosis Data)

Risk Adjustment System

(RAS)

(Risk Score Calculation)

Health Plan Management

System (HPMS)

(Bid Data)

Medicare Advantage

Prescription Drug System

(MARx)

(Payment Calculation)

120 - Operations

(Rev. 118; Effective: ICD-10: Upon Implementation of ICD-10, ASC X12: January 1, 2012 (for ASC X12 5010); Implementation: ICD-10: Upon Implementation of ICD-10,

ASC X12: January 1, 2012 (for ASC X12 5010))

CMS requires Medicare Advantage plans to collect hospital inpatient, hospital outpatient,

and physician risk adjustment data and submit the data to CMS at least quarterly for

calculation of the risk score for use in the payment calculation and payment

reconciliation. Each quarterly submission should represent approximately one-fourth of

the data a plan submits during a data collection year.

Once plans have collected the data and verified the data came from an acceptable data

source, the plans submit the data using the Risk Adjustment Processing System (RAPS)

format and provide the five required data elements in the cluster. Table 12 lists the five

required elements and a description for each.

Table 12. Five Required Data Elements/Descriptions

Required Data Element Description

Health Insurance Claim

(HIC) Number

Beneficiary identification number issued by the Railroad

Retirement Board (RRB) or the Social Security

Administration (SSA).

Diagnosis code International Classification of Diseases (ICD) codes are

used to describe the clinical reason for a patient’s

treatment.

Service from date

The dates of service define when a beneficiary received

medical treatment from a physician or medical facility. For

outpatient and physician services, the From Date and

Through Date may be identical. For inpatient services,

these dates are usually different from each other, and reflect

the dates of admission to and discharge from a facility.

Service through date

Provider type The types of providers, for the purpose of risk adjustment,

MA organizations must collect data from are:

• Hospital Inpatient facilities

• Hospital outpatient facilities

• Physicians

Plans submit the five data elements in the RAPS format (or the Direct Data Entry, an

online data entry application for the RAPS format) to the Front End Risk Adjustment

System (FERAS) for initial edit checks. FERAS transmits files successfully passing the

initial edit checks to RAPS for detailed editing and processing.

The FERAS and RAPS systems generate Transaction Reports describing the status of the

transaction and any errors that occurred during processing. RAPS also provides

Management Reports that identify the disposition of the submitted data so plans can

verify their data and project their payment.

Finalized diagnosis clusters are stored in the RAPS database and used for calculation of

risk scores. The Risk Adjustment System (RAS) extracts the diagnostic data from the

RAPS database to calculate risk scores by executing the CMS-HCC payment model.

RAS sends the risk scores to the Medicare Advantage Prescription Drug System (MARx)

for use in calculation of plan payments and payment reconciliation.

Figure 2 illustrates the risk adjustment collection, submission, and payment process.

Figure 2. Operations Overview

MA Plan Collects Hospital Inpatient/Hospital

Outpatient/Physician

MA Plan Verifies Data Source is Acceptable

Risk Adjustment System (RAS) extracts diagnostic data

from RAPS Database and calculates risk score

Risk Adjustment Processing System (RAPS)

conducts detailed edit checks

Front End Risk Adjustment System (FERAS)

conducts initial edit checks

Risk Adjustment Processing System (RAPS) Database

stores diagnosis clusters

MA Plan Submits Risk Adjustment Data to CMS

in RAPS Format or Direct Data Entry (DDE)

Medicare Advantage Prescription Drug System (MARx)

calculates plan payment and reconciliation payments