RAF Risk Adjustment Factor
A member's risk score in a risk adjustment model — the sum of demographic factors, HCC coefficients and interactions — used to scale plan payment.
A risk adjustment factor (RAF), or risk score, expresses how much a person's expected healthcare cost differs from the average. In Medicare Advantage, the RAF multiplies the plan's base payment rate for that member.
How a RAF score is built
- Demographic factors — age, sex, Medicaid eligibility, original reason for entitlement (such as disability), and institutional or community status.
- HCC coefficients — for each HCC the member has after hierarchies are applied.
- Interaction terms — extra weight for certain combinations of conditions, and in some models for the number of conditions.
The factors are added together. An average member has a score of about 1.0 before normalization.
Adjustments
CMS applies a normalization factor and a coding-intensity adjustment to risk scores. These change from year to year and are published in the annual Rate Announcement.
Why RAF matters to coders
Each accurately documented and coded HCC can change the RAF; each unsupported one creates repayment and compliance risk. RAF should be a result of accurate coding, never its goal.