Why CMS Risk Adjustment Matters

By Joseph
May 19, 2023

When it comes to managing a healthcare organization, there are lots of administration tasks to consider. Everything from medical records to patient engagement must be considered, and along the way, there are various factors that influence the trajectory. The insurance sector is a major component that contributes to the overall efficacy of healthcare systems, and this is where CMS risk adjustment comes in. Created as a way to ensure fairness and consideration across the board, CMS risk adjustment is discussed in this guide to highlight the ongoing importance of such a system, and why it exists in the first place. 

What is CMS Risk Adjustment?

The main concept behind CMS risk adjustment is that it calculates the cost of treatment for a patient in any given year. It takes a look at the specific health needs and projects a figure based on expected treatment time, professional input, and recovery prospects. It provides a fair system for patients, doctors, and all other healthcare professionals that are hands-on with this essential care. Without a platform managing these factors, there would be no viable way to price up treatment claims and establish fair fee models or understand the varying needs within the medical environment. So, aside from these main points, why else does this matter in the bigger healthcare picture?

It Matters for the Doctors

Without risk adjustment strategies and analysis in this area, doctors would never be able to receive fair remuneration. While there is always controversy and challenges to the salaries of these essential workers, the CMS model exists to ensure that when a procedure of appointment is complete, the financial obligation is reflective of the treatment and services. It also secures a way for health institutions to plan ahead and avoid running out of resources, which means that doctors, nurses, and other healthcare staff are better supported in their roles and not held back by simple things. 

Keep Costs Relevant

Healthcare costs are constantly shifting. A medication that costs X amount one year is likely to have completely changed by the following quarter. Though prices have seen significant changes owing to high levels of inflation in recent years, there is always a strong argument for keeping cost ratios as relevant, fair, and in sync as possible across the various hospitals and health-focused institutes. 

Making Treatment Options Fair

Hospitals are essentially a business and are often run in line with this thinking. That means, there is always a risk that patients who will offer more money because their treatment demands are bumped up the list. However, this is never ethical or acceptable practice. Risk adjustment allows for a more even approach to pricing patient outcomes and ensures that everyone gets the expected access to healthcare when they need it. 

So, this style of adjustment really impacts the system as a whole. There are so many factors in the mix that it is too difficult to step away from something that levels the playing field in such a meaningful way. Whether it is ensuring insurance policies are exactly what they need to be for the patients and the doctors, or facilitating stronger ethical measures within healthcare institutions, there has to be accountability and data-driven solutions.

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