Risk adjustment has become an important tool in setting global payments in provider payment reforms. It is used by private health insurers such as Blue Cross Blue Shield of Massachusetts in the Alternative Quality Contract. The U.S. Department of Health and Human Services issued proposed rules in April 2011 on Medicare accountable care organizations (ACOs), and discussed different approaches to using risk adjustment to set benchmarks for savings calculations.
This paper, prepared by Milliman for the Massachusetts Medical Society, discusses principles and important considerations when using risk adjustment in provider payment reforms.
Related paper: Risk adjustment and its applications in global payments to providers