Risk adjustment

Risk adjustment is a tool used to predict a health plan member’s future health care expenses based on existing data, including diagnoses and demographics.

Risk adjustment helps health plans calculate how much they should expect to pay towards each member based on their individual health needs. For example, a member with type 2 diabetes and high blood pressure may result in a higher CMS reimbursement to their health plan for health care services and associated costs than a member without those chronic conditions.

Risk adjustment is also used internally by health plans like Priority Health to:

  • See a clear picture of our members’ health
  • Improve quality of care with provider and member engagement using proactive measures 
  • Increase data submission accuracy and completeness to achieve more accurate risk factor scores

Who benefits from risk adjustment?

In addition to lowering the cost of care for our members by helping CMS reimburse us properly, risk adjustment and accurate condition capture (coding to the highest degree of specificity) has many benefits for you and your patients. 


  • Have their needs met in a way that results in better care experiences and health outcomes
  • Have proper funding from CMS ensured for enhanced programs offered by Priority Health like SilverSneakers, Papa companion care, Abridge, BrainHQ, MyStrength, OTC allowance, etc.


  • Capture and understand your patients' full burden of illness to better manage health care outcomes
  • Earn incentive dollars through our PCP Incentive Program (PIP) and Disease Burden Management (DBM) program. Learn about our provider incentive programs (login required).

Priority Health

  • Receives accurate, fair reimbursement from CMS based on the health status of our members
  • Able to offer enhanced benefits by lowering the cost of care

How are health risks calculated?

The health risk formula uses variables including age, gender, previous health history and the presence of acute  and chronic conditions that are documented annually in a member's chart. This formula calculates a risk score for each plan member.

Complete, accurate and timely submission of encounter/claims data is essential to capture chronic and acute conditions. 

  • Diagnostic sources: CMS will only consider diagnoses from inpatient, outpatient, hospital and physician data. All other data is excluded.
  • Demographics: Information such as age, gender, geographic region, Original Medicare entitlement, disability and Medicaid status impact risk scores. 

General risk adjustment methodology

  1. Providers submit claims with diagnosis codes
  2. Diagnosis codes are used to determine beneficiary risk scores
  3. Risk scores determine risk-adjusted reimbursement or payment

Hierarchical Condition Categories (HCCs)

The method that CMS uses to adjust payments to health plans for both commercial and Medicare plan members depends on accurately capturing claim diagnosis codes affiliated with an HCC. By risk adjusting plan payments, CMS can make accurate payments to health plans for enrollees with differences in expected medical costs.

How we identify risk adjustment possibilities

Priority Health uses claim data analytics to find "suspect diagnoses" that we should review for validation and potential correction. Once we identify these suspect diagnoses, we must review the charts for those members.

Remember: If it's not documented during an encounter, it didn't happen.

Chart reviews help everyone

This scrutiny of medical records is a compliance measure to ensure our payments from CMS are based on reliable and accurate records from physicians and facilities. Aside from payment inequities, undocumented, inaccurate or missed diagnoses can lead to members not receiving the quality of care they need to lead healthy lives.

Our records review aims both to highlight missing diagnoses and to locate diagnoses that were added in error. Both should be sent to CMS to adjust their payments to us. Our goal is to capture the full burden, no more, no less, of illness each year for our members.

Risk adjustment programs

We partner with our provider network through the following risk adjustment programs to capture complete and accurate health status information each year for our risk adjusted members. 

New program

  • 2024 Disease Burden Management (DBM) program: The DBM program replaced our Advanced Health Assessment (AHA) and Persistency programs, which retired on Dec. 31, 2023. This program was designed to help you streamline your administrative workflow with more efficient coding requirements and close care gaps with a focus on chronic condition recapture and PCP visits.

Retired programs

The following programs were retired with the close of the 2023 program year:

  • Advanced Health Assessment (AHA) program: An AHA visit is an annual assessment of the members’ health to meet CMS expectations for a complete and accurate evaluation of their health status. An AHA visit must be face-to-face encounter between an eligible member and qualified provider. The best time to complete an AHA visit is during a patient’s Annual Wellness Visit (AWV) or Comprehensive Physical Exam (CPE) because these allow for more time with the patient. Get more AHA program details
  • Persistency program: A risk adjustment incentive offered to providers serving our Medicare Advantage and commercial individual members to capture and code chronic conditions. It’s an alternative to our AHA program.

Risk adjustment resources