Rising practice costs, downward pressure from third-party payers and government budget problems are among the major issues that affect practice profitability. Guidehouse Director Simita Mishra and her co-author highlight the Risk Adjustment Factor (RAF) and how, if used appropriately, it could result in better patient care and higher reimbursement for practice professionals who negotiate with payers.
The RAF is used by the Centers for Medicare & Medicaid Services (CMS) to adjust payments made to Medicare Advantage (MA) contractors to reflect the severity of their enrolled population. The RAF method improves on all previous efforts by combining a demographic factor for each patient with a measure of his/her clinical condition. Hierarchical Condition Categories (HCC) provide clinical component data.