The calculation of an enrollee’s risk score, which is used in risk adjustment

 The calculation of an enrollee’s risk score, which is used in risk adjustment in healthcare, begins with their demographics and Hierarchical Condition Categories (HCCs), which are the medical codes for their conditions¹. The demographic factors used to calculate risk scores include:

• Age
• Sex
• Socioeconomic data
• Disability status or eligibility
• Medicaid eligibility
• Institutional status (nursing homes, inpatient care, etc.)¹

These demographics are paired with an enrollee’s list of diagnoses. These codes have all been assigned a specific value for risk adjustment¹. For example, diabetes that is well-managed with no complications would have an HCC of 19 ( requiring higher expense due to onoing care) , while diabetes in full ketoacidosis would be an HCC 17 (requiring lower expense due to a temporary problem). These numbers, paired with the demographic information, would determine how much risk adjustment is necessary for this enrollee¹.

The variables that most impact one’s risk adjustment are: disability status, low-income status, Medicaid, the reason for entitlement, age, and sex¹. They utilize prospective modeling, meaning they use previous year data to predict cost in the current year vs. concurrent modeling, which uses current year data¹.

In addition, people without chronic conditions might have more fluctuation in their risk scores due to diagnosis changing year over year. Still, those who require consistent treatment will likely remain in a high-risk adjustment program¹.