The Centers for Medicare & Medicaid Services (CMS) uses
Hierarchical Condition Categories (HCC) and demographic
information to calculate beneficiary risk scores, which
predict expected Medicare spending by beneficiaries.
CMS-HCC risk scores may be underestimating expected
healthcare utilization among rural beneficiaries compared
to urban beneficiaries. Incorrect estimation of expected
healthcare utilization can lead to important financial
losses for providers.
The study investigates potential differences in rural and
urban CMS-HCC risk scores by rurality, census region, and
beneficiary race or ethnicity. Previous studies across a
variety of health measures suggest that rural Medicare
beneficiaries are sicker than urban beneficiaries.
However, this study finds that average risk scores are
lower for community‐dwelling and institutional setting
beneficiaries in rural counties as compared to urban
counties. In addition, the more rural an area, the lower
the risk score.
Furthermore, in both rural and urban counties, average
risk scores are generally higher for Black and Indigenous
beneficiaries as compared to beneficiaries of other
races, and average risk scores are lowest for
beneficiaries residing in the West census region as
compared to other census regions. Among community
dwelling beneficiaries, risk scores are generally lower
in rural counties when stratifying by census region and
beneficiary race or ethnicity.
An analysis of average utilization by healthcare setting
for community‐dwelling beneficiaries in metropolitan,
micropolitan, and non‐core area counties in the year
prior to the calculated risk score revealed some
differences in utilization count data, primarily in
hospital outpatient and office‐based settings. Thus,
observed differences in risk scores in rural versus urban
counties may be driven in part by differences in the
intensity or types of healthcare interventions received.
However, this study cannot rule out a role for coding
practices and resources as a potential additional driver
of the observed differences.