MRA – Medicare Risk Adjustment – was established in 2003 and phased in over a five year period. Through this payment methodology, the MedicareAdvantage Plan’s (and the provider’s) capitation is adjusted based on the risk assumed for the patient’s care, the number of chronic conditions and the patient’s severity of illness as reported by the physician using appropriate ICD-9-CM codes.
Risk adjusted reimbursement attempts to fund providers for the anticipated costs of care based on the patient’s health status. Under this payment methodology, it stands to reason that sicker patients generate a higher capitation payment to the provider because the costs of their care will be higher. Technically, then, MRA is a more equitable and accurate method of capitating providers of MedicareAdvantage patients.
Success under the risk adjusted payment paradigm hinges on reporting diagnoses using correct ICD-9-CM codes at the highest level of specificity, in order to maximize the reimbursement and compensate the Plan, IPA and/or MSO for appropriate chronic care management.