Clinical and social risk adjustment – reconsidering distinctions

Careful risk adjustment is at the core of any equitable payment model for the care of populations. There is widespread agreement that U.S. health care providers and payers who are responsible for the care of sicker patients (and its cost) should be compensated more generously than those who are responsible for the care of healthier patients, to limit perverse incentives that would encourage providers to selectively care for healthier patients. For years, Medicare has used rigorous risk-adjustment methods that account for various clinical characteristics to adjust population-based payments for Medicare Advantage plans and for health systems and clinicians participating in risk-based arrangements. Such methods are also applied in value-based arrangements, under which reimbursement is altered on the basis of patient outcomes in defined areas. The most common characteristics used for clinical risk adjustment include age, sex, surgical history, and conditions such as heart disease and diabetes. (author abstract)