Developing A Risk Adjustment Methodology for Medicare Drug Plans

This paper describes the work NORC did to supplement the Federal Employee Health Benefits data (FEHBP) used to develop drug risk adjustment factors for over 65 individuals with a full drug supplement to Medicare. This data needed to be supplemented because the FEHBP data did not adequately represent, low-income, disabled, or non east Coast populations. After linking Medicaid data to Medicare data to get the appropriate drug diagnoses, the utilization patterns of low-income and disabled populations was examined. The higher utilization found was used to develop special payment adjustments for drug plans which enrolled such individuals. [PDF - 4 pages]