Medicare Advantage (MA) payments are risk adjusted so CMS can predict expected healthcare costs for each enrollee in the upcoming payment year. The model used for this forecasting is the CMS-HCC (Hierarchical Condition Category) risk adjustment methodology. It converts demographic factors (such as age/sex and eligibility status) plus documented, coded diagnoses (ICD-10-CM codes that map to HCCs) into a Risk Adjustment Factor (RAF). CMS then uses the RAF to adjust capitation payments to MA plans to reflect the member’s anticipated resource needs. This is why outpatient CDI places heavy emphasis on accurate, specific capture and annual “recapture” of active chronic conditions that are monitored, evaluated, assessed/addressed, or treated during the encounter—because the prior year’s valid HCCs drive the next year’s predicted cost and payment. By contrast, APCs relate to OPPS facility outpatient payment, RVUs/RBRVS relate to physician fee schedule valuation, and GPCIs adjust payment geographically; none of those are the MA risk forecasting model.