RAF: Risk Adjustment Factor, Explained | Pelica Health

Short answer

RAF, the Risk Adjustment Factor, is a per-member numerical score CMS uses to predict the expected cost of caring for a Medicare Advantage enrollee. It is built from demographic factors and clinical conditions captured as HCCs. A higher RAF means CMS pays the plan more per member per month.

What RAF is

RAF stands for Risk Adjustment Factor. It is a per-member numerical score that the Centers for Medicare and Medicaid Services (CMS) uses to predict the expected cost of caring for a Medicare Advantage (MA) enrollee. The score is derived from two sources: demographic factors and clinical conditions.

The demographic factors include age, sex, Medicaid status, and disability status. The clinical conditions are documented diagnoses that map to Hierarchical Condition Categories (HCCs), the grouping CMS uses to translate ICD-10 codes into payment-relevant categories. A member's RAF is the sum of the coefficients for their demographics and each qualifying HCC. A RAF of 1.0 represents an average-cost beneficiary; a higher RAF means CMS pays the plan more per member per month.

Why RAF matters

RAF is the multiplier that turns clinical reality into plan revenue. CMS multiplies each member's RAF by a county base rate to set the monthly payment the plan receives for that member. Two members in the same county can generate very different payments depending on their documented conditions, even when the care delivered is identical on paper.

Because payment scales directly with RAF, an accurate score is both a revenue and a compliance question. Under-capture leaves money on the table for care the plan is already delivering. Over-capture, or capture without defensible documentation, creates exposure in a Risk Adjustment Data Validation (RADV) audit. The operating goal is not a high RAF but an accurate one that reflects the documented burden of the panel and survives audit.

How RAF is calculated and used

CMS sums the demographic coefficients and the HCC coefficients for each member to produce the RAF, then multiplies by the plan's base rate. Several mechanics make RAF an operating-cadence problem rather than a one-time calculation:

• RAF resets every calendar year. The score does not carry forward. Each year starts from the demographic baseline plus whatever conditions are documented that year.
• Chronic conditions must be re-documented annually. A chronic condition such as diabetes or chronic kidney disease must be captured in a face-to-face encounter each year to count toward that year's payment. A diagnosis documented in 2025 does nothing for the 2026 RAF unless it is documented again in 2026.
• Submitted RAF and recognized RAF can differ. The RAF implied by the diagnoses a plan submits is not always what CMS credits. After CMS applies hierarchy trumping and edits, the recognized RAF can be lower than the submitted RAF.
• Plans reconcile through the MMR and MOR. Plans compare submitted to recognized RAF using the Monthly Membership Report (MMR) and the Model Output Report (MOR), which show what CMS accepted at the member and HCC level.

Common mistakes teams make with RAF

• Treating capture as a one-time event. Because RAF resets annually, conditions captured in a prior year quietly fall off if they are not re-documented. Teams that run an annual sweep instead of a year-round cadence lose recapture by attrition.
• Optimizing submitted RAF and ignoring recognized RAF. A growing gap between submitted and recognized RAF is one of the clearest early signals of trumping errors or future RADV findings, but it only shows up if the team reconciles MMR and MOR every month.
• Documenting in a constrained or trumped group. Capturing several related conditions when only the highest-weighted one counts toward payment adds audit surface without adding RAF.
• Confusing high RAF with accurate RAF. A RAF that outruns the documented clinical evidence is exposure, not revenue. The defensible position is documentation first, score second.
• Flagging gaps after the claim instead of before the encounter. Once the submission window closes, a missed condition cannot be recaptured for that payment year. Post-claim alerts arrive too late to act on.

How Pelica handles RAF

Pelica's Risk Adjustment Copilot surfaces, per member, which conditions need re-documentation this year, applies hierarchy and trumping logic in real time, and tracks every diagnosis from submission through the MMR and MOR so submitted RAF and recognized RAF stay reconciled. Across Pelica deployments, customers have lifted RAF by roughly +0.4 in two quarters with no new headcount.

Related terms

RAF connects to several other value-based care concepts. HCC (Hierarchical Condition Category) is the building block that contributes most of a member's clinical RAF. V28 is the current CMS-HCC model that changed many coefficients and the ICD-10 crosswalk. MOR (Model Output Report) and MMR (Monthly Membership Report) are the CMS files plans use to reconcile submitted RAF against recognized RAF.

Sources

• CMS: Risk Adjustment in Medicare Advantage (CMS-HCC model, software, and technical documentation)

Frequently asked questions

Common questions about the Risk Adjustment Factor from risk adjustment teams.

What is a good RAF score?

There is no single good RAF in the abstract. A RAF of 1.0 represents an average-cost beneficiary. A score above 1.0 means CMS expects the member to cost more than average and pays the plan more; below 1.0 means less. What matters operationally is whether your RAF accurately reflects the documented clinical burden of your panel, not whether it is high or low.

How is RAF calculated?

CMS sums coefficients from two parts: a demographic component (age, sex, Medicaid status, disability status, and original reason for entitlement) and a clinical component (each Hierarchical Condition Category, or HCC, captured from documented diagnoses). The total is the member's RAF, which is multiplied by the plan's base rate to set the monthly payment.

Does RAF reset every year?

Yes. RAF resets every calendar year. Chronic conditions do not carry forward on their own. Each condition must be re-documented in a face-to-face encounter during the year to count toward that year's payment. A diabetes diagnosis captured in 2025 does not contribute to the 2026 RAF unless it is documented again in 2026.

What is the difference between submitted RAF and recognized RAF?

Submitted RAF is the score implied by the diagnoses a plan sends to CMS. Recognized RAF is what CMS actually credits after applying hierarchy trumping, edits, and filtering. The two can differ. Plans reconcile the gap using the Monthly Membership Report (MMR) and the Model Output Report (MOR), which show what CMS accepted at the member and HCC level.

Why did my RAF drop even though my members got sicker?

The most common cause is a documentation gap rather than a clinical change. Because RAF resets annually, conditions that were captured in a prior year but not re-documented in a face-to-face encounter this year fall off the score. Model changes such as the V28 transition can also reduce coefficients or remove ICD-10 codes from the HCC crosswalk, compressing RAF even when acuity is stable.

See your RAF the way CMS does.

Pelica's Risk Adjustment Copilot shows which conditions need re-documentation this year, applies trumping logic in real time, and keeps submitted RAF reconciled with recognized RAF. Across Pelica deployments, customers have lifted RAF by roughly +0.4 in two quarters with no new headcount.