The Centers for Medicare and Medicaid Services (CMS) uses a Part D risk adjustment model (RxHCC) to estimate the relative risk score of each member, which is used to adjust the direct subsidy payments that plans receive. The Pharmaceutical Research and Manufacturers of America commissioned Milliman to analyze how the Inflation Reduction Act’s changes to the Medicare Part D benefit may impact risk scores and highlight areas of importance for consideration. The paper includes discussion of: 

• A risk adjustment model overview 
• An analysis 
• The significance of the direct subsidy 
• Timing of data used to calibrate the RxHCC model 
• Assignment of health conditions

This paper was commissioned by PhRMA.