Demographics and diagnoses

Risk adjusted diagnosis coding is a model used to predict future health care costs based on demographics and diagnoses. It is most commonly used by Medicare to set rates for patients who are in Medicare Advantage plans. A Medicare Advantage plan is paid different amounts for the Medicare patients they cover. The model takes into account the age and gender of the population, whether they’re living at home or in an institution, if they are dually eligible for Medicare and Medicaid, and if they are being treated for end stage renal disease.  And, the diagnosis codes submitted on claims or in files submitted by the Medicare Advantage plan to CMS. The model also varies payment by the county the patient lives in.

The disease burden of the population of patients being served is measured by the diagnosis codes that are submitted to the payer on the hospital and professional claim forms and in additional file submissions.