RAF Revenue Calculator for Medicare Advantage Contracts

How RAF Scores Translate to PMPM Revenue

The Risk Adjustment Factor is the multiplier applied to the risk-adjustable base rate (for a plan, its bid-based or benchmark-capped rate; for a provider, the base rate in its contract) to set the per-member-per-month payment. With a raw RAF of 1.05 and a $1,100 base rate under CY2026 factors, CMS divides the raw score by 1.067 and applies the 5.9% coding adjustment, so the payment RAF is 0.9260 and the payment is about $1,018.61 PMPM, not $1,100 × 1.05. Every 0.01 of raw RAF then adds about $9.70 PMPM, which across thousands of members and twelve months compounds into millions of dollars a year. Understanding this translation mechanism is the foundation for every Medicare Advantage financial planning exercise, from coding program ROI to contract-level profitability analysis.

Using the Per-RAF Value in Contract Decisions

A 0.1 change in average RAF is one of the largest variables in Medicare Advantage economics. For a provider group with 25,000 members, a $1,100 base rate and 60% of premium, 0.1 of raw RAF is worth about $17,461,856 a year under CY2026 CMS factors, and the value scales linearly with membership. Finance leaders use this per-RAF value to evaluate coding investments, set budget targets and explain risk adjustment to boards; to see what it does to a contract's margin, use the MA risk contract profitability calculator. See what 0.01 and 0.1 RAF are worth analysis.

Testing Coding Programs Against Contract Revenue

Hierarchical Condition Category (HCC) coding drives the diagnosis-based part of RAF. An accepted HCC adds its coefficient to that member's raw score unless a higher-ranked HCC in the same hierarchy already applies, so the dollar value of an HCC is its net coefficient × base rate × 12 ÷ normalization × (1 − 5.9%) × % of premium. The HCC revenue impact model covers how to estimate realized, not suspected, revenue.

Modeling Revenue Risk in MA Contracts

Medicare Advantage revenue is inherently variable because it depends on RAF scores that are subject to coding yield uncertainty, CMS normalization adjustments that change annually, and base rate updates that can deviate from expectations. Effective revenue modeling requires scenario analysis across these variables rather than single-point projections. Conservative scenarios should model RAF below baseline (for example 0.02–0.03, or from your own history) with above-trend normalization increases, while optimistic scenarios should pair successful coding initiatives with favorable rate updates. This spread gives boards the context they need to make informed decisions about risk arrangements, reserve adequacy, and capital allocation.

FAQ: RAF Revenue and Medicare Modeling

How is RAF revenue calculated for Medicare Advantage contracts?

Annual revenue = base rate PMPM × payment RAF × % of premium × member months, where payment RAF = raw RAF ÷ the CMS normalization factor × (1 − the 5.9% MA coding pattern adjustment). For CY2026 the normalization factor is 1.067; for CY2027 it is 1.079.

Should I enter a raw RAF or a payment RAF?

Enter the raw score from your risk adjustment data and the calculator applies CMS normalization and the coding adjustment. A score from CMS's monthly membership report (MMR) is already payment-adjusted, so choose payment-adjusted to avoid adjusting it twice. For the dollar value of a RAF change, see what 0.01 RAF is worth.

How often should RAF revenue projections be updated?

At least quarterly, using actual CMS payment data, RAF true-ups and membership changes, and again after each CMS Advance Notice and Rate Announcement.