Risk adjustment is primarily used to circumvent against the risk of a contingent, uncertain loss. Insurance is the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. Medicaid risk adjustment is used to keep costs down and ensure coverage for a large number of individuals. Medicaid benefits protect the beneficiary against the risk of high-cost medical care in the case of a serious accident or illness. Not everyone will experience high-cost medical events, but for those who do, the financial impact could be devastating.
Pooling risk is fundamental for all types of insurance. Utilizing a large risk pool is needed to produce stable and measurable properties that can be used to accurately predict future costs. Medicaid is designed to pool the financial risk of a high cost medical event across a large group of people. The majority of individuals in the risk pool may pay more than their actual health services cost however they do so to guard against the risk of a major loss. The excess payments are pooled to cover the cost of individuals who do experience high-cost events.
Risk selection can occur by chance or by stringent practices implemented by health plans. Risk selection is imperative in the process of risk adjustment. Assessing future costs and health outcomes for a large group of people is a complex process. Payments based on a capitation rate are a key component in the functionality of the American Medicaid system. Fairly compensating health plans for accepting the risk of enrolling beneficiaries of variety of health statuses is a complicated process.
Medicaid beneficiaries vary greatly in terms of their health status, which in turn affects their use of benefits and costs. Those with serious illnesses, chronic conditions, or who are fragile will naturally require more care and incur higher costs than the average member. If Medicaid selected only the highest-cost beneficiaries it would have difficulty remaining viable with unadjusted capitation rates. In contrast, if it selected a healthier-than-average pool in its enrollment, it would make excess profits at the expense of the enrollees. Risk selection is used to help leverage the costs.
Medicaid is one of the world's largest health insurance programs. Medicaid risk adjustment is a necessary tool in the overall execution of a successful health plan. Providing high-quality, low cost health care for an extremely large and diverse group of people is a momentous task. The Centers for Medicaid and Medicare are continuously assessing new procedures and practices in attempt to improve the American Health care system.
Pooling risk is fundamental for all types of insurance. Utilizing a large risk pool is needed to produce stable and measurable properties that can be used to accurately predict future costs. Medicaid is designed to pool the financial risk of a high cost medical event across a large group of people. The majority of individuals in the risk pool may pay more than their actual health services cost however they do so to guard against the risk of a major loss. The excess payments are pooled to cover the cost of individuals who do experience high-cost events.
Risk selection can occur by chance or by stringent practices implemented by health plans. Risk selection is imperative in the process of risk adjustment. Assessing future costs and health outcomes for a large group of people is a complex process. Payments based on a capitation rate are a key component in the functionality of the American Medicaid system. Fairly compensating health plans for accepting the risk of enrolling beneficiaries of variety of health statuses is a complicated process.
Medicaid beneficiaries vary greatly in terms of their health status, which in turn affects their use of benefits and costs. Those with serious illnesses, chronic conditions, or who are fragile will naturally require more care and incur higher costs than the average member. If Medicaid selected only the highest-cost beneficiaries it would have difficulty remaining viable with unadjusted capitation rates. In contrast, if it selected a healthier-than-average pool in its enrollment, it would make excess profits at the expense of the enrollees. Risk selection is used to help leverage the costs.
Medicaid is one of the world's largest health insurance programs. Medicaid risk adjustment is a necessary tool in the overall execution of a successful health plan. Providing high-quality, low cost health care for an extremely large and diverse group of people is a momentous task. The Centers for Medicaid and Medicare are continuously assessing new procedures and practices in attempt to improve the American Health care system.
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Unknown - Sunday, September 23, 2012
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