Risk Adjustment in Medicare Part D Prescription Drug Benefit. Open Door ForumDecember 2004. Risk Adjuster Basics. Capitated payment is adjusted according to the expected cost of the enrollee. Expected cost is derived from enrollee characteristics:
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Risk Adjustment in Medicare Part DPrescription Drug Benefit
Open Door ForumDecember 2004
Payment = standardized bid enrollee’s risk factor – plan’s enrollee premium
Additive model: factors for demographic characteristics + factors for diagnoses
Female, age 76$ 850.283
Diabetes, w. complications1,600.533
Diabetes, uncomplicated 1,000.333
Congestive Heart Failure650.217
Total Annual Pred. Spending$4,0501.350
For implementation, dollar amounts are divided by the national mean (~ $3,000) to create relative factors that multiply base rates.
Female, age 76$ 550.500
Diabetes, w. complications300.273
Diabetes, uncomplicated 200.182
Congestive Heart Failure250.227
Total Annual Pred. Spending$1,4001.272
For implementation, dollar amounts are divided by the national mean (~ $1,100) to create relative factors that multiply base rates.