What is the main goal of risk adjustment?

The main goal of risk adjustment is to ensure equitable payment amounts for Medicare Advantage (MA) plans. This process is essential because it helps to account for the variation in health status and needs of different populations served by MA plans. By adjusting payments based on the risk profiles of enrollees, it aims to level the playing field among plans that may serve healthier versus sicker populations. This way, plans that take on higher-risk patients receive adequate funding to provide necessary care, ensuring that all beneficiaries have access to quality health services regardless of their health conditions.

Fair compensation aligns with the overarching principle of maintaining the sustainability and effectiveness of the healthcare system, which is particularly crucial in a risk-sharing environment. It helps insurers manage their financial risks while promoting improved health outcomes for beneficiaries, ultimately supporting the goals of the Medicare program.