Exploring Episode-Based Approaches for Medicare Performance Measurement, Accountability and Payment Final Report. Risk adjustment


Most of the experts believed that risk adjustment is very important to episode-based approaches.  They pointed to risk adjustment as necessary in order to prevent risk selection by providers and/or insurers.  One expert stated that even disregarding other benefits, risk adjustment was necessary to get provider buy-in to episode-based approaches.

However, many of the experts pointed to the difficulty of risk adjustment for care provided over the course of an episode of care, often in multiple settings.  Some drew a distinction between risk adjustment models that predict costs, which are relatively well-developed, and models that predict outcomes, which are not well-developed.  All of the risk-adjustment models currently in use were considered likely inadequate for use in episode-based approaches.  For this reason, other methods for minimizing risk, such as special treatment of outliers, were identified as necessary by several experts.  

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