HCFA's Risk Adjustments

Special Managed Care Bulletin

As you're aware Congress and HCFA are initiating some sweeping changes to Managed Medicare starting January 1, 1999. Among those are a declared intention to risk-adjust capitated payments to HMOs (replacing the current AAPCCs). The whole idea of risk-adjustment is abhorrent to many healthplans (not a big surprise since many of them have made handsome profits "cherry-picking" the healthiest of seniors while leaving the sickest, costliest for others to deal with). In reaction to proposed risk-adjustments and other factors, many HMOs have elected to pull out of the Medicare Risk business.

There are some excellent articles on the risk adjustment for capitation controversy in the current New England Journal of Medicine. I recommend that you read these at your earliest convenience. You can find the articles on the web at:

http://www.nejm.org/content/1998/0339/0026/TOC.asp

Check out:

Editorial: "Risk adjustment or risk avoidance"

Sounding Board: "Paying more fairly for Medicare capitated care"

Health Policy Report: "The risk-adjustment debate"