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How Risk Adjustment Factor (RAF) Scores Impact Physician Compensation

Many physicians’ earnings are influenced by an unexpected factor – and can be measurably increased with the right technology. Risk adjustment factor (RAF) scores play a key role in determining compensation and delivering quality care for patients. 

This article explores how that plays out and enables physicians to assess whether their paycheck could be given a healthy boost through improved HCC coding. 

RAF Scores: An Overview 

Risk adjustment factor (RAF) scores estimate the cost of patient care – enabling the Centers for Medicare and Medicaid Services (CMS) to fairly reimburse healthcare providers for treating patients: 

  • RAF scores are calculated using hierarchical condition category (HCC) coding which providers submit annually 
  • The score measures risk compared to a regional average, enabling the CMS to adjust payments to reflect the true risk and care costs associated with each individual patient 
  • Increased scores can therefore lead to significantly higher reimbursements 

But RAF scores also have a measurable impact on physicians’ take-home pay. 

Three Ways RAF Scores Can Influence Physician Compensation 

Physicians can be compensated in many different ways – and there is no “standard approach”. Recent research shows that nearly two-thirds of physicians earn their income through at least two streams, with salary contributing anywhere from 15.8-89% of their total compensation.  

RAF scores can therefore influence physicians’ pay in several different ways: 

1. Profit Sharing

Roughly 12% of physicians participate in a profit-sharing agreement; they receive a portion of the organization’s profits, and their total compensation is dependent on the organization’s overall financial performance. However, these arrangements are nearly 2x more common amongst primary care physicians (PCPs) than specialists – and they only compromise 6-15.3% of their annual income. 

RAF scores have a direct impact on these physicians’ income as they influence the overall financial health of the practice. Higher reimbursements from Medicare Advantage (MA) and other health plans lead directly to profit increases – and therefore boost profit-sharing physicians’ total compensation.  

2. Quality Performance Incentives

Nearly 84% of PCPs and 57% of specialist physicians are compensated based on the patient care quality indicators – with these scores determining up to 25% of the physician’s pay. While RAF scores do not directly influence care quality or physician performance, they are a primary factor in managing care costs and ensuring physicians have everything they need.  

RAF scores determine how much funding is available to support treatment – and therefore how effectively physicians can deliver care. Low RAF scores and the subsequent lost MA funding may negatively impact resource provisions and ultimately make it more difficult to maximize future patient outcomes.  

3. HCC Coding Incentives

Nearly 20% of PCPs receive compensation based on HCC coding, with another 6.5% specifically incentivized based on coding accuracy. These are relatively small factors, accounting for up to 12% of these physicians’ total compensation. But this means a 35% increase in RAF scores is likely to produce a dramatic boost to their earnings.   

RAF scores are directly linked to HCC coding, meaning higher RAF scores imply more thorough coding. A tool like HCC Assistant, which automates HCC coding recommendations at the point of care with 97% accuracy, therefore not only reduces the administrative burden for physicians – it will help many increase their take-home pay. 

Increase RAF Scores by 35% with HCC Assistant 

Many healthcare providers leave money on the table, with missing HCC codes and inadequate documentation reducing their RAF scores – and ultimately limiting their Medicare reimbursements. 

HCC Assistant helps you avoid that fate: the tool uses natural-language processing (NLP) to ingest structured and unstructured patient data and produce HCC coding recommendations at the point of care: 

  • Reduce HCC Coding Error: Recommendations are proven to be 97% accurate and the tool improves documentation to support MA claims. 
  • Save Hours: Physicians are freed from the administrative burden of HCC coding and can focus on patient care. 
  • Increase Compensation: The tool increases the average provider’s RAF scores by 35% and can therefore make a measurable difference to your pay check. 

Want to explore how it could help your practice improve risk adjustment? 

Book a Demo