Centers for Medicare and Medicaid services are changing payments to Medicare Advantage plans to reflect the health status of each beneficiary. CMS uses Medicare advantage risk adjustment methodology to ensure that the Medicare Advantage features work effectively by paying more for registered users, who are expected to cost more to take care and less for healthier participants. The Medicare Advantage program methodology relies on risk adjustments to remain predictable. A stable risk adjustment system is essential to ensure the sustainability of the deliverables and the constant innovation in providing high quality, coordinated and affordable care for all Medicare Advantage beneficiaries. To explain in layman’s language, Harry is 35, he is healthy and has low health costs. This is not the case for Mrs. Becker, she is 75, has diabetes and asthma. She definitely needs more care. This is very important for Harry and Mrs. Backer to have good and affordable health care. Medicare must do what is best for all of its clients. It shouldn’t matter that the client is unhealthy and needs lots of care or healthy with fewer care needs. Centers of Medicare and Medicaid services has established a risk model that utilizes data from claims in the customary Medicare Program to assign the comparative values for health care conditions (e.g., diabetes, chronic kidney disease, congestive heart failure), and other factors. , determine that Medicare Advantage Risk Assessment. Risk assessment of a single beneficiary in one year is based on diagnoses from the previous year. The agency does periodic adjustments and the model is based on cost analysis for beneficiaries in the Medicare program. The Health insurer has to charge both Harry and Mrs. Becker the same premium. But what happens if the insured pays a premium of the healthcare cost are higher or lower than the premium. After all, the premium is the same for everyone. On average young people are healthier than the elderly and therefore they have lower healthcare cost. And so profit and loss arise on insured groups that are predictable. These differences in profit and loss are called risk differences. The danger is that an insurer will focus more on average lower cost than the nominal premium. This is called “risk selection” and it is prohibited. Risk adjustment tackles this risk selection. If risk selection is not prevented than health insurer with lots of unhealthy clients have a problem. They need to charge a higher premium to pay for health care costs. While the other insurer with most healthy clients is able to charge a much lower premium. Clients then using the health insurer that offers lower premiums. Healthy clients tend to change insurer more often, meaning the expensive insurer has to charge an even higher premium, resulting in losing more clients. The insurer goes bankrupt. That is the reason Medicare risk advantage methodology is used. The money is distributed according to age, gender and client’s state of health-giving an insurer more money for older clients and customers who use more healthcare services. Elders and patients with chronic diseases need more health care so it costs more. The insurer gets enough to pay for the healthcare of both clients making justice. Unfortunately, there is no simple way to measure health care costs. That is why risk adjustment factor is complicated. The risk adjustment factor (RAF) is a relative measure of the likely cost to meet the health needs of each beneficiary. For example, older folks typically have a higher RAF score than younger people. And those with a particular or family history in certain circumstances may achieve a higher risk adjustment factor (RAF) rate than those without such a history. The RAF will adjust payments for beneficiaries participating in Medicare Advantage Plans. The payment rates may vary depending on the predicted risk of the patient (e.g., the expected cost of maintaining the patient’s health). Therefore, the payment depends on the complete and precise reporting of patient data. How does the RAF score stimulate the health insurers to buy in better health care? Most of the patients within the healthcare do not immediately receive the quality care they need. And that makes the health care needlessly expensive. The insurer can make sure that the clients get the correct kind of treatment for the right price. This enables the insurer to bear less cost in total and can ask for the lower nominal premium than competitors. That means better care at a low price. Risk adjustment factor stimulates the insurer to buy in high-quality care that is accessible and affordable for everyone, achieving the objectives of CMS risk adjustment. CMS has phased-in risk adjustment models by combining risk scores Over quite a few years until 100 percent of the risk score is calculated with the new model. Separate risk scores are calculated, CMS risk adjustment sums up each risk result weighted by the percentage determined in the blend. Risk adjustment score also tells something about the care of patient groups. If health care is average than the amount of the adjustment is equal to the care cost. With unnecessary expensive care, the amount from the adjustment is actually lower than the care cost. The insurer wants to know that good care is being provided, the older patients receive the best treatment, is the care program effective. If harry get injured while working out by whom should he be treated? It makes a lot of difference in terms of costs, whether a physician treats younger patients or older patients. The insurer takes account of difference in age gender and health conditions, researching the quality of care according to RAF score. Through Medicare Advantage, risk adjustment methodology helps the insurer to buy in the best care Health care may change, but good documentation is still a cornerstone for accurately describing the work of the provider and the patient’s condition. Risk adjustment looks closely at how ICD documentation and coding adds to the complexity of the encounter, medical decision-making, and time with the patient. Good ICD coding records the patient’s actual clinical picture and reflects the thinking process of the provider.