1. A method of encoding video data in a video encoder, the method comprising: performing a first order prediction process via the video encoder to generate at least two first order residual blocks for a given video block being coded; performing a second order prediction process via the video encoder to generate at least one second order residual block for the given video block being coded based on one of the first order residual blocks and a pre-defined mode for the second order prediction process; and performing a rate-distortion analysis via the video encoder with respect to the second order residual block and at least one of the first order residual blocks to substantially minimize a rate-distortion cost associated with encoding the given video block, wherein the rate-distortion analysis with respect to the second order residual block accounts for a combined effect of the first order prediction process and the second order prediction process in coding the given video block.