Recommendations for optimizing risk adjustment in health care reimbursement
Optimizing risk adjustment would improve health equity, says the American College of Physicians (ACP) in a new policy paper published today. "Modernizing Risk Adjustment in Health Care: A Path to Equity and Efficiency," published in Annals of Internal Medicine, offers recommendations for improving this component of health care financing and reimbursement through proactive measures that promote a more equitable and effective modern health care system.
Risk adjustment is an integral part of the health care reimbursement process. It considers patient characteristics, so payments to physicians from payers reflect the level of care a patient requires, helping to ensure appropriate reimbursement that accounts for the complexity of a patient's condition.
"The existing approach to risk adjustment presents several challenges that impact the provision of care, including significant time physicians must spend on extensive documentation and coding that could otherwise be devoted to engaging with patients," said Jason M. Goldman, MD, MACP, President, ACP. "An improved needs-based payment system would benefit physicians and patients alike."
To enhance the fairness and effectiveness of health care financing systems, in the paper, ACP recommends that health care programs and sectors use standardized methods of risk adjustment, so all health care entities understand how it works and how decisions are made. This would prevent discrepancies in how patient needs are evaluated and funded and would encourage unbiased use of resources.
ACP encourages the interoperability of health care data and investment in health information technology to adopt common data standards, which would promote accurate risk adjustment and prevent the siloing of health data. Health care entities should collaborate to enact policy changes that prevent patient data used in adjusting risk from being reset annually.
Additionally, physicians, patient advocacy groups, and public and private payers should participate in routine evaluations and feedback that integrates valid and reliable metrics into risk adjustment models. ACP also calls for a strategic effort to limit opportunities to "game" the system by aligning economic incentives with the goal of high-quality, patient-focused care.
In a key recommendation, ACP advocates for research to develop validated methods for measuring the cost of caring for patients who experience health care disparities and inequities and maintains that it is essential that all risk adjustment approaches do not reinforce or perpetuate stereotypes.
Patients experiencing health care disparities and non-medical drivers of health often face higher barriers to accessing care, which can lead to worsened health conditions and increased health care needs over time. This recommendation aims to foster a more holistic understanding of health.
Finally, advanced analytics and machine learning have the potential to revolutionize risk adjustment by providing access to more accurate data and predictive analytics. They should be used to improve upon risk adjustment models and methodologies. Prospective and current risk adjustment models have strengths that can be leveraged through hybrid models, enabling a more comprehensive view of health over time and better capturing patient complexities.
"Current risk adjustment practices have a significant impact acrhoss our entire health care ecosystem; the potential positive effects of improving these would be far-reaching," concluded Dr. Goldman. "ACP's recommendations would move us towards a payment system that more accurately reflects patient needs."
More information:
Brian E. Outland et al, Modernizing Risk Adjustment in Health Care: A Position Paper of the American College of Physicians, Annals of Internal Medicine (2025). DOI: 10.7326/ANNALS-25-00280
Provided by American College of Physicians
