Understanding the MAO-004 Report: A 2025 Guide for Medicare Advantage Organizations

Introduction 

The MAO-004 Report is a foundational document for Medicare Advantage Organizations (MAOs) involved in risk adjustment and encounter data submissions. Issued monthly by CMS, this report provides critical feedback on diagnosis codes submitted via the Encounter Data Processing System (EDPS), identifying which are deemed eligible for risk adjustment. 

Since its launch in Payment Year (PY) 2015, and updated in August 2017 to include only EDRs accepted through EDPS, the MAO-004 has served as an essential tool for auditing, compliance monitoring, and payment validation. 

Purpose and Relevance 

The MAO-004 is more than a routine file—it is CMS’s mechanism to communicate which diagnoses tied to submitted encounters and chart reviews qualify for risk score calculation. For teams managing risk adjustment, understanding and acting on this data is essential for compliance and maximizing revenue integrity. 

Structure of the MAO-004 File 

The file format is 500-byte fixed length and consists of three main record types: 

  1. Header Record – Contains metadata, such as Contract ID, report date, submission phase, and version. 

  2. Detail Record – The core of the report, capturing diagnosis-level data and its eligibility status. 

  3. Trailer Record – Summarizes the number of records and ensures report completeness. 

Accessing the MAO-004 Report 

CMS delivers the report through two methods: 

1. EFT Mailbox (Electronic File Transfer) 

  • File Name Example: R.ZZZZZZ.MAO004FY.Dyymmdd.Thhmmss 

  • Frequency: Monthly 

  • Format: Fixed length, 500 bytes 

2. MARx User Interface 

  • Navigate to “Reports” → Select “Monthly” 

  • Choose the appropriate date range 

  • Select “Risk Adjustment Eligible Diagnosis Report” 

  • Enter Contract ID and run the search 

Detail Record Breakdown 

Each detail record corresponds to a single diagnosis entry and contains key fields such as: 

  1. Record Type
    Always “1” — indicates a detail record.

  2. Beneficiary ID
    This is either the Health Insurance Claim Number (HICN) or the Medicare Beneficiary Identifier (MBI).

  3. Encounter ICN
    Refers to the Internal Control Number assigned to each encounter.

  4. Diagnosis Codes
    The submitted ICD-10 codes that CMS will evaluate for risk adjustment eligibility.

  5. Add/Delete Flag
    Indicates whether the diagnosis was:

    • “A” for Added

    • “D” for Deleted

    • Blank/Space for previously reported

  6. Allowed/Disallowed Flag
    Indicates whether the diagnosis was considered for risk adjustment:

    • Blank means Allowed

    • “D” means Disallowed

  7. Reason Codes
    Explains the reason behind a disallowed diagnosis:

    • “H” for CPT/HCPCS mismatch

    • “T” for Type of Bill issue

    • “D” for late submission

    • “Q” for quarterly CPT/HCPCS update

    • “N” for not applicable

Common Flags: 

  • A: Allowed 

  • D: Disallowed 

  • N: Not applicable 

Reason Codes: 

  • H: Invalid due to CPT/HCPCS logic 

  • T: Invalid due to incorrect Type of Bill 

  • D: Denied due to late submission 

  • Q: Newly accepted due to quarterly code update 

Trailer Record Overview 

The trailer acts as a final checkpoint: 

  • Confirms the number of records processed 

  • Validates data completeness and alignment with the submission batch 

  • Includes the MAO’s Contract ID and record count 

Why the MAO-004 Report Matters 

For Medicare Advantage Organizations, MAO-004 reports offer: 

  • Audit Preparedness – Ensures diagnosis codes were accepted and used by CMS 

  • Revenue Assurance – Confirms codes are contributing to risk scores 

  • Error Identification – Flags denied records with reasons to guide corrections 

  • Data Integrity – Reinforces alignment with CMS submission standards 

Best Practices for Using MAO-004 Reports 

  • Review Phase and Version in the header to confirm the file layout 

  • Analyze reason codes to identify high-priority corrections 

  • Use both EFT and MARx access points for redundancy and historical comparisons 

  • Validate trailer record counts to ensure no data truncation or loss 

Frequently Asked Questions 

Q: How frequently are MAO-004 reports generated? 
A: Monthly via CMS’s EFT mailbox and MARx user portal. 

Q: What’s the difference between Phase and Version? 
A: Phase refers to the release stage (e.g., Phase 4), and Version indicates the layout version (e.g., Version 0). 

Q: What does the Add/Delete flag indicate? 
A: It shows whether a diagnosis is new, deleted, or unchanged in the system. 

Q: Which codes most commonly lead to diagnosis disallowance? 
A: Codes “H” (CPT/HCPCS issues), “T” (Type of Bill), and “D” (late submission). 

Conclusion 

The MAO-004 report is a critical compliance and operational asset in the Medicare Advantage risk adjustment lifecycle. By properly interpreting this report, MAOs can drive greater accuracy in revenue, ensure audit readiness, and uphold CMS’s standards for data integrity. 

Whether you are a coder, analyst, or compliance lead, mastering the MAO-004 gives you powerful insights to guide smarter decisions and strategic improvements. 

📩 Need help interpreting your MAO-004 reports or streamlining encounter data workflows? 
Let our team at Health Data Max assist. 
🔗  book a demo 

Mastering the MMR: A Deep Dive into Medicare Advantage Payments, Adjustment Reason Codes, and RAF Data

Get the full breakdown of the Medicare Monthly Membership Report (MMR), including ARC codes, risk adjustment fields, and payment logic. Ideal for coders and compliance analysts. 

Excerpt Introduction: 
If you're working in Medicare Advantage or Part D, the MMR is your monthly playbook for payment accuracy. Learn how to decode its 91 fields, understand ARC codes, review RAF logic, and track risk and reimbursement with precision. 

📌 What Is the MMR and Why It Matters 

The Monthly Membership Report (MMR) is the official CMS data file used to track monthly capitation payments, adjustments, and risk scores for Medicare Advantage and Part D beneficiaries. 

Think of it as your financial DNA from CMS — every line item reveals what was paid, why it changed, and what risk model was applied. 

Key details: 

  • Format: Fixed-width, 495-character record 

  • Frequency: Monthly 

  • Used in: MA Plans, Part D Plans, Compliance Audits, RAS Submissions 

🔍 What’s Inside the MMR? (Overview of the 91 Fields) 

The MMR is organized into logical sections. Here’s what you’ll find: 

🧍‍♂️ Beneficiary Demographics 

  • Name, Gender, DOB, State & County Code 

  • Beneficiary ID (includes MBI format) 

  • Hospice, ESRD, Medicaid, Institutional, Dual-Status 

📊 Risk Adjustment & Status 

  • RAF A/B (Fields 24–25) 

  • Risk Adjustment Factor Type Code (Field 46) 

  • RAAG – Risk Adjustment Age Group (Field 40) 

  • Low-Income & Medicaid Add-On Fields (Fields 20, 66, 67, 68) 

💸 Payments, Premiums & Rebates 

  • Monthly Part A, B, D amounts 

  • Rebate fields (Part C/D) 

  • MTM Add-on, LIS Premium Subsidy, Reinsurance, Direct Subsidy 

🔁 Adjustments & Reconciliations 

  • ARC – Adjustment Reason Code (Field 28) 

  • Cleanup ID (Field 91) 

  • Start and End Dates for payment period (Fields 29–30) 

🧠 ARC Codes: Why Payments Change (Field 28) 

ARC = Adjustment Reason Code, and they’re the "receipt" behind every payment change CMS makes. 

Where You'll Find ARC: 

  • MMR Detail Report (Field 28) 

  • MMR Summary Report (Field 4) 

  • PPR/IPPR Capitated Payment Files (Field 4) 

🗂️ ARC Categories at a Glance: 

Range  Reason 

00  Standard prospective payments 

01–22  Retroactive enrollment & eligibility 

23–27  Risk adjustment changes 

28–37  Premium/rebate adjustments 

38–46  Segment ID or eligibility corrections 

50–66  Merge, incarceration, lawful status 

90–94  System-driven CMS cleanup events 

📘 Notable ARC Codes 

  • 01 – Death Notification 

  • 07 – Retroactive Hospice 

  • 10 – Retroactive Medicaid 

  • 25 – Part C RAF Reconciliation 

  • 36 – Part D Rate Change 

  • 44 – Correction of Previously Failed Payment 

  • 65 – Incarceration Status Confirmed 

  • 94 – Cleanup-Related Adjustment 

💡 Pro Tip: If payment amounts shift unexpectedly, check ARC first. It's your audit trail. 

🆕 Highlight: Part D Default Risk Factor Code (Field 87) 

This field identifies default RAF logic when a beneficiary has less than 12 months of Medicare Part A entitlement or insufficient RAS data. 

📅 Code Logic by Period: 

➤ For January 2011–Dec 2024: 

  • 0 = Not ESRD, Not Low Income, Not Originally Disabled 

  • 5 = ESRD, Low Income, Not Originally Disabled 

  • 7 = ESRD, Low Income, Originally Disabled 
    (And other combinations for Low Income, ESRD, and disability flags) 

➤ NEW: Starting January 2025: 

  • A = Not ESRD, Not Low Income, Not Originally Disabled, MAPD 

  • F = ESRD, Low Income, Originally Disabled, MAPD 

  • P = ESRD, Low Income, Originally Disabled, PDP 

  • N = Not ESRD, Low Income, Not Originally Disabled, PDP 
    (More combinations included for full classification) 

This code helps determine how the system calculates RAF when claims data is missing or eligibility is partial. 

📌 Fields 88–90: Monthly Payment or Adjustment Rates

CMS uses county-level benchmarks to calculate payment. These fields show what rate was applied: 

  • Field 88 – Part A Rate
    Monthly Part A state/county payment or adjustment rate.

  • Field 89 – Part B Rate
    Monthly Part B state/county payment or adjustment rate.

  • Field 90 – Part D Rate
    Monthly Part D payment or adjustment rate.

If you're reconciling rate changes or benchmarking CMS payments, these fields tell you the base amounts before adjustments. 

🛠️ Pro Tips for Analysts & Coders 

Here’s how to use the MMR to tighten accuracy, audits, and payments: 

✅ Always monitor ARC Codes (Field 28): 
They're your "why" for retroactive payments, flags, and cleanups. 

✅ Review Cleanup ID (Field 91): 
Tracks systemic adjustments or RAS audit overpayments. 

✅ Track RAF Changes with Fields 24–26, 46, 87: 
Identify if a diagnosis, plan status, or demographic change affected the RAF. 

✅ Cross-Reference Date Fields (Fields 29–30): 
Make sure the start and end dates of payment match ARC context. 

✅ Export MMR into Excel or Power BI: 
Create dashboards for ARC trend analysis or RAF monitoring by plan or segment. 

🧩 V28 Coding & MMR Impacts 

CMS's V28 model has eliminated 2,200+ ICD-10 codes from HCC mapping. This means: 

  • You’ll see more RAF recalibrations from vague to specific codes (E11.69 → E11.22 or E11.319) 

  • ARC 25, 26, 37, and 41 might appear more often as RAF updates ripple through 

This makes your documentation and coding more critical than ever — and the MMR a must-watch file each month. 

🔚 Final Word: Know Your MMR, Own Your Accuracy 

The MMR isn’t just a file — it’s the pulse of your plan’s payments. By mastering its structure, tracking ARC and RAF fields, and understanding the changes tied to diagnosis and dual-status logic, you’ll boost your team’s confidence and compliance. 

🎁 Bonus Resources 

Understanding the Model Output Report (MOR): A Vital Tool in Medicare Advantage Risk Adjustment

In the world of Medicare Advantage (MA), where accurate payment depends on the health risk of enrollees, precision in data reporting is not optional—it's fundamental. At the heart of CMS’s risk adjustment process lies the Model Output Report (MOR). This document is a vital feedback mechanism that informs Medicare Advantage Organizations (MAOs) how CMS is interpreting submitted diagnosis data and applying it to calculate risk scores. 

This blog explores everything you need to know about the MOR 

🔍 What is the Model Output Report (MOR)? 

The Model Output Report is a monthly report generated by CMS for each contract, showing which Hierarchical Condition Categories (HCCs) and demographic variables have been used to compute each enrollee’s risk score. These scores directly affect the payments made to MA plans. 

The MOR exists in two formats: 

  • MOR Report – A human-readable summary of beneficiary risk factors 

  • MOR Data File – A flat file optimized for automated processing by plan systems 

Together, they provide a detailed view into how CMS has interpreted diagnosis data to arrive at specific HCC assignments. 

📅 Frequency and Timing of Reports 

CMS typically runs the risk adjustment model three times per year: 

  1. Initial 

  2. Mid-Year 

  3. Final 

Each run produces updated risk scores and MORs. The monthly MORs reflect the most recent model run, unless a new run has occurred. For example, January through June payments are based on the Initial model run, while July through December are based on the Mid-Year run. 

🗂️ MOR File Components 

📄 Report Format 

The report is structured for human review and includes: 

  • Contract ID 

  • Run date 

  • Payment month/year 

  • Beneficiary ID, name, DOB, sex, ESRD indicator 

  • Assigned HCCs from RAPS or Encounter Data (record types D or I) 

  • Indicators of data source and model version (e.g., V22, V23) 

📁 Data File Format 

The flat file version is designed for systems to process: 

  • 200-byte records (Part C), 168–180 bytes (Part D) 

  • Binary flags indicating presence or absence of each HCC 

  • Demographic switches (e.g., gender, age group, ESRD) 

Each record type maps to a specific model version (e.g., CMS-HCC V24, RxHCC) and data source. 

🔍 Diagnoses and HCC Mapping 

Diagnoses are submitted to CMS in 837 Encounter Data format 

Each diagnosis is mapped to a Condition Category (CC), and CCs are grouped into Hierarchical Condition Categories (HCCs). In each hierarchy, only the most severe condition is counted for risk scoring. 

A diagnosis will appear on the MOR only if: 

  • It maps to a payment HCC 

  • It was submitted within the relevant service date window 

  • It wasn't superseded or deleted 

  • It wasn’t excluded due to a more severe condition in the same hierarchy 

🧠 Why a Diagnosis Might Be on MAO-004 but Missing in MOR 

The MAO-004 file lists all accepted diagnoses, while the MOR filters for only payment-relevant HCCs. Here's why a diagnosis might be missing from the MOR: 

  • The diagnosis doesn't map to a payment HCC 

  • A more severe condition in the same hierarchy overrides it 

  • The encounter was deleted or replaced before the risk score run 

🗃️ Accessing MOR Files 

MOR files are distributed via: 

  • MARx User Interface (UI) 

  • EFT Mailbox (Gentran, TIBCO, Connect:Direct) 

Naming conventions follow this format: 

  • For Report(HCCMODR): 

P.Rxxxxx.HCCMODR.Dyymm01.Thhmmsst 

  • For Data File (HCCMODD): 

P.Rxxxxx.HCCMODD.Dyymm01.Thhmmsst 

Where: 

  • xxxxx is your contract ID 

  • yy/mm is year/month of the payment period 

  • hhmmss is timestamp 

Archived MORs can be ordered through the CMS Enterprise Portal. 

🧮 Why MOR Matters 

The MOR isn’t just a compliance artifact. It’s your primary validation tool for ensuring that the risk scores CMS is using: 

  • Align with your internal HCC projections 

  • Reflect accurate submission 

  • Provide transparency into CMS’s interpretation of your data 

Used effectively, it can drive better forecasting, error resolution, and audit preparation. 

📌 Final Thoughts 

The Model Output Report bridges your internal data and CMS’s final risk scoring methodology. It’s the only direct window into which HCCs made it into payment and why. For Medicare Advantage plans, understanding the MOR means being equipped to audit, reconcile, and defend your risk adjustment strategy. 

At HealthDataMax, we help MAOs automate, decode, and act on MOR data, making sure your plan isn’t just CMS-compliant, but CMS-optimized. 

Need help interpreting your MOR or aligning your encounter data with CMS models? 

 📩 Reach out to our team at HealthDataMax to learn how we can support your risk adjustment operations. 

Understanding the CMS MAO-002 Encounter Data Processing Status Report

The MAO-002 Encounter Data Processing Status Report is a foundational document provided by CMS to help Medicare Advantage Organizations (MAOs) understand the acceptance or rejection status of submitted encounter data. With growing emphasis on data accuracy and risk adjustment transparency, this report plays a pivotal role in compliance, reimbursement, and encounter data tracking. 

🔍 What Is the MAO-002 Report? 

The MAO-002 is a processing status report generated after a file passes all front-end validations and is processed through the Encounter Data Processing System (EDPS). It provides: 

  • Disposition statuses: Accepted or Rejected 

  • Error codes for all records and lines 

  • Risk Adjustment (RA) assessment for diagnosis codes in EDRs and CRRs 

Beginning in May 2022, the MAO-002 also began including preliminary RA assessments such as Allowed, Disallowed, or Not Applicable. 

✅ How the Header Line ('000') Works 

The '000' line in the MAO-002 identifies the encounter-level status: 

  • If rejected, the entire encounter is rejected — even if line-level records are valid. 

  • If accepted and at least one other line (001, 002, etc.) is accepted, the encounter is accepted overall. 

  • If all lines are rejected, the header is also rejected (without error codes). 

❌ Rejected Lines vs. Accepted with Errors 

  • Rejected lines come with specific error codes and descriptions. 

  • Accepted lines may also have informational error codes, prompting further review. 

MAOs are encouraged to carefully review Accepted lines with errors as they may affect data quality or payment. 

🔢 Preliminary Risk Adjustment (RA) Assessment 

The MAO-002 provides a preliminary assessment of each record’s diagnosis code RA eligibility. It may be used to track risk-adjustable diagnoses prior to monthly MAO-004 reporting. 

When discrepancies exist between MAO-002 and MAO-004, MAO-004 is considered the authoritative source. 

RA Flag Definitions: 

  • Blank: RA status not applied 

  • PA (Preliminary Allowable): EDR/CCR is potentially risk adjustable 

  • PD (Preliminary Disallowable): Not eligible for risk adjustment 

  • PN (Preliminary Not Applicable): Encounter not applicable for RA 

  • FR (Final Reject): Rejected by EDPS on MAO-002 

📚 MAO-002 Report Layout Summary 

Header Record Fields: 

  • Record Type, Report ID ("MAO-002"), Report/Transaction Dates 

  • Report Description: "Encounter Data Processing Status Report" 

  • Submission Interchange Number, File Type (TEST or PROD) 

Detail Record Fields: 

  • MA Contract ID 

  • Plan Encounter ID (Claim Control Number) 

  • Encounter ICN 

  • Preliminary RA flag: PA, PD, PN, FR, Blank 

  • Reason codes (PH = CPT/HCPCS not allowable, PT = Type of Bill not allowable) 

  • Encounter Line Number, Encounter Status (Accepted/Rejected) 

  • Error Code and Description 

Trailer Record Fields: 

  • Totals for: processing errors, lines accepted/rejected/submitted 

  • Totals for: records accepted/rejected/submitted 

All fields are clearly labeled with fixed-length formatting, making the report both machine-readable and suitable for human review. 

🚀 Final Thoughts: Why the MAO-002 Matters 

The MAO-002 is more than a status report; it is a strategic compliance tool. It enables: 

  • Accurate encounter data validation 

  • RA eligibility tracking 

  • Targeted resubmission of rejected encounters 

  • Comparison with MAO-004 data for audit readiness 

By understanding and using MAO-002 reports effectively, MAOs can minimize revenue leakage, maintain audit readiness, and ensure CMS-compliant submissions. 

The CMS MMR File Explained: Your Roadmap to Financial Clarity in MA

For Medicare Advantage Organizations (MAOs), the Monthly Membership Report (MMR) Detail File is one of the most critical — yet often underutilized — tools for revenue validation, compliance tracking, and risk adjustment accuracy. Let’s break down what this file contains, why it matters, and how to use it strategically. 

📌 What Is the MMR Detail File? 

The MMR Detail File is a monthly beneficiary-level transaction file sent by CMS to Medicare Advantage plans. Each row in the file reflects a payment event — whether it’s an original capitation, a retroactive adjustment, or a cleanup record — associated with a beneficiary enrolled in the MA plan. 

The file is formatted as a fixed-width layout, meaning every variable has a specific position (e.g., characters 1–5 for contract ID), and spans over 400+ bytes per row. These rows are packed with data that, when decoded, reveal CMS’s entire reasoning behind payments made to your plan. 

🧠 Key Data Elements in the MMR File 

The file contains a wide range of information, but here are the most impactful data points: 

🆔 Beneficiary and Contract Information 

  • Contract Number (positions 1–5): Your CMS-assigned plan contract (e.g., H1234). 

  • Plan Benefit Package (PBP) ID (6–8): Specific product under the contract. 

  • Segment ID (9–10): Identifies the plan segment if the plan is regional. 

  • Beneficiary ID (20–31): May include either the Health Insurance Claim Number (HICN) or the new Medicare Beneficiary Identifier (MBI). 

🏥 Enrollment & Demographic Details 

  • Gender Code, Date of Birth, and State/County Codes help match internal eligibility records and validate member metadata. 

  • OREC (Original Reason for Entitlement Code) distinguishes beneficiaries by entitlement type — age-in, disability, or ESRD. 

💰 Payment Breakdown 

  • Monthly Capitated Payments (positions 96–123): Includes separate values for Part A and B. 

  • Part C Risk Adjustment Factors (positions 72–85): These values determine the risk-adjusted revenue — community, institutional, ESRD, or new enrollee. 

  • Default Risk Factor Code (71): Indicates when CMS applied a default RAF due to missing diagnosis or demographic data. 

⚠️ Adjustment & Reconciliation Fields 

  • Adjustment Reason Code (ARC) (90–91): Indicates why the payment record exists — retroactive enrollment, contract change, or data cleanup. 

  • Cleanup ID (486–495): Used for batch corrections, typically flagged with an ID for tracking (e.g., SNOW tickets). 

  • Transaction Type Code: Tells you if the row is original or a correction. 

👥 Medicaid & Dual Status Indicators 

  • Dual Eligibility Code: Flags whether the member is dually eligible for Medicaid — which can impact wraparound payments or SNP eligibility. 

  • Low-Income Subsidy (LIS) Payment Fields: Captures any subsidies added to standard PMPM rates. 

🎯 Why Should MA Plans Care? 

Understanding the MMR file layout gives MA plans a huge operational advantage: 

✅ 1. Validate CMS Payments 

The file reflects what CMS thinks you should be paid — compare it with internal projections based on RAF, demographics, and enrollment history. 

📉 2. Identify Revenue Leakage 

Look for: 

  • Records flagged with default risk factors (potential missed coding). 

  • ARC codes that point to deletions or reductions in past payments. 

  • Adjustments made for retroactive terminations or incorrect segment IDs. 

📊 3. Support Audit Readiness 

CMS, OIG, and internal compliance teams may audit based on these payment events. The MMR file provides the transactional trail you need to reconcile any discrepancies. 

🧾 4. Reconcile with Claims & Chart Review 

Link risk scores and payments to actual diagnoses documented in claims or EMRs. This can uncover coding gaps or documentation errors that impact revenue. 

🛠️ Tips for Making the MMR File Actionable 

  • Use ETL scripts or SQL loaders to parse the fixed-width format into a readable table. 

  • Track ARC codes monthly to identify payment volatility. 

  • Match MBI/HICN and segment IDs with internal systems for reconciliation. 

  • Monitor Cleanup IDs and flags for large-scale CMS retroactions (e.g., overpayment recovery or OIG audits). 

📎 Final Word 

The MMR Detail File isn't just another CMS artifact — it’s the financial blueprint that drives how much your plan gets paid, when, and why. Whether you're in Finance, Risk Adjustment, Compliance, or Operations, understanding this file is essential to maintaining accuracy, avoiding revenue leakage, and staying audit ready. 

Understanding the Model Output Report (MOR): A Key Component of Risk Adjustment Accuracy in Medicare Advantage 

The Model Output Report (MOR) is a pivotal resource that Medicare Advantage Organizations (MAOs) and Prescription Drug Plans (PDPs) use to understand how CMS interprets enrollee-level risk adjustment data. Created after the Model Output File (MOF), the MOR summarizes all the demographic and Hierarchical Condition Category (HCC) variables that were triggered for a beneficiary. These variables are essential for determining each enrollee’s Risk Adjustment Factor (RAF) score. 

This report serves a dual purpose: supporting operational insight and enabling data validation. It ensures that health plans have visibility into how CMS interpreted their data submissions and provides transparency into the risk model output. 

What Is the MOR?

The MOR provides a list of all the demographic and HCC model variables that are triggered for a particular beneficiary. This list forms the basis for the risk score that CMS calculates. For example, if an enrollee had diabetes or a chronic pulmonary condition, and it was submitted and accepted through CMS filtering, then those corresponding HCCs would be reflected in the MOR. 

Two Main File Types: 

  • Data File: Compact, flat file designed to be read positionally. Each position corresponds to a specific model variable (e.g., Male, Age 70–74, Diabetes without Complication, etc.). Each variable is represented by a 1 or 0, indicating whether it was triggered. 

  • Report File: A more readable format designed for human review. It includes plan ID, HICN/MBI, contract number, and descriptive variable names for easy interpretation. 

Both files provide the same underlying data but are designed for different uses. Larger plans may prefer the data file for integration into automated systems, while smaller plans may use the report version for manual review. 

Who Receives Which Files? The type of MOR received depends on the plan’s structure: 

  • MA Plans (Part C): Receive Part C MOR 

  • PDP Plans (Part D): Receive Part D MOR 

  • MA-PD Plans: Receive both Part C and Part D MORs 

This segmentation ensures that each organization receives only the relevant data for their enrolled beneficiaries. 

When Are MOR Files Sent? CMS provides MOR files at specific intervals throughout the year: 

  • Monthly MOR: Generated from January to June using monthly payments. These files provide near real-time feedback on the data CMS is using for payment. 

  • Final MOR: Sent after the Final Reconciliation payment year using final MOF data. This is the definitive source and should be used for final score validation. 

Why the MOR Is Important: The MOR is CMS’s only official feedback to plans regarding the risk model output. Plans use it for a variety of critical tasks: 

  • Validation: Ensures that internal risk adjustment logic aligns with CMS's interpretation. 

  • Audit Preparation: Identifies which demographic and clinical variables were activated, helping plans build documentation. 

  • HCC Identification: Highlights missing HCCs or unrecognized diagnoses. 

  • Appeals: Offers data to support correction of risk scores through appeals. 

Smaller plans may rely solely on the MOR for understanding their risk scores, while larger plans may compare MOR data to internally generated scores to catch inconsistencies. 

What is Full Risk (FR) ? The concept of Full Risk (FR) applies to plans based on how long a beneficiary has been enrolled: 

  • Continuing Enrollees: Members with 12 months of A/B coverage. 

  • New Enrollees: Members with less than 12 months of continuous A/B. 

Plans receive separate scores for new and continuing enrollees and can choose which group-level score to use. This flexibility is critical in aligning payment strategies. 

Use Cases for the MOR 

  • Coding Gap Analysis: Identify unrecognized conditions not included in the final model output. 

  • Data Submission Review: Confirm what CMS has accepted and filtered from your submissions. 

  • Provider Feedback: Use the MOR to give feedback to providers on the impact of their documentation. 

MOR and RAF Scores The MOR aligns with the RAF scores CMS calculates. Every triggered variable in the MOR contributes to the final RAF score. Plans can cross-reference this data with their own risk scoring logic to ensure consistency. 

Conclusion The Model Output Report (MOR) is an essential tool for Medicare Advantage and Prescription Drug Plans. By offering transparency into the variables used in risk score calculation, the MOR empowers plans to validate, audit, and refine their risk adjustment programs. Whether you're a large national plan or a small regional player, effectively using the MOR can make a significant difference in compliance, revenue accuracy, and operational excellence. 

Understanding every element of the MOR and its generation process helps ensure that plans not only remain compliant but also optimize their risk adjustment performance in alignment with CMS guidelines. 

Demystifying Risk Adjustment: Why It Matters in Medicare Advantage 

In the world of Medicare Advantage (MA), where healthcare outcomes and financial models intersect, Risk Adjustment plays a pivotal role in ensuring fairness, transparency, and sustainability. But what exactly is risk adjustment, and why does it matter to providers, payers, and patients alike? 

Let’s break it down. 

💡 What is Risk Adjustment? 

Unlike traditional Fee-for-Service (FFS) Medicare, where providers are paid based on services rendered, Medicare Advantage Organizations (MAOs) receive a fixed monthly payment per member — regardless of how many services that person uses. 

However, some members require more care than others. That’s where Risk Adjustment comes in. 

🧮 Risk Adjustment is CMS’s method of modifying payments to MAOs based on the predicted healthcare costs of their enrollees. 

If a member is expected to incur higher medical costs (based on age, gender, and diagnoses), the MAO gets a higher payment. This helps prevent plans from "cherry-picking" healthier members and encourages better care for complex patients. 

🧾 Where Does Risk Adjustment Data Come From? 

There have been two main data sources: 

  1. RAPS (Risk Adjustment Processing System) – Was In place since 2004, this system has recently been completely replaced by Encounter Data Processing System below. It used a condensed version of encounter data. MAOs select and submit only risk-relevant diagnoses from their claims. 

  2. Encounter Data Processing System (EDPS) – Introduced in 2012, this is a more complete data submission method where MAOs submit all medical encounters (like FFS claims), not just risk-relevant ones. 

👉 Key difference: 

 RAPS = filtered data 

 Encounter data = full medical picture 

This shift moves responsibility for identifying risk adjustment diagnoses from the MAOs to CMS, helping ensure more transparency and consistency. 

🔁 How Does the Process Work? 

It’s a collaborative cycle: 

  1. Providers treat patients and generate medical records. 

  2. MAOs collect and review this data. 

  3. They submit encounters to CMS through EDPS. 

  4. CMS checks for errors and either accepts or returns files. 

  5. MAOs correct errors (if any) and resubmit for final approval. 

It’s a cycle of validation — ensuring only accurate and complete data contributes to payment decisions. 

👥 Who Uses This Data — and Why? 

📌 Users 

  • Medicare Advantage Organizations (MAOs) 

 Licensed entities (often insurers) contracted by CMS to deliver Medicare Advantage benefits. 

  • Centers for Medicare & Medicaid Services (CMS) 

 Uses encounter data to calculate accurate payments and ensure proper use of federal funds. 

🤝 Stakeholders 

  • Medicare Beneficiaries 

 While they don’t directly interact with risk scores or claims data, their medical care and diagnoses directly influence MAO payments — and thus access to care. 

Accurate risk adjustment means better funding for plans serving high-risk populations, and fewer incentives to avoid enrolling complex patients. 

📌 Why It Matters 

With the shift toward value-based care, CMS is continuously refining how risk adjustment works. MAOs must adapt by improving coding accuracy, data quality, and submission compliance. Providers, coders, and IT systems all play a role in this ecosystem. 

🧠 At its core, risk adjustment is about fairness — ensuring health plans are paid accurately to serve every patient, from the healthiest to the most complex. 

✅ Final Thoughts 

As CMS continues to evolve payment models, organizations that embrace the power of data, quality coding, and collaborative workflows will thrive. 

At Health Data Max, we help healthcare organizations optimize risk adjustment through advanced tools, education, and technology. From encounter validation to AI-powered audit platforms, we make compliance easier and more impactful. 

📬 Have questions about improving your risk adjustment process? Reach out — we’re here to help.