How do payers use risk adjustment to prevent selection bias in MA and MIPS?

• A. By applying penalties to all providers with high-cost patients only.
• B. By adjusting payments solely on geographic location.
• C. By incorporating patient risk scores (e.g., HCCs) to adjust payments and performance measures based on patient complexity.
• D. By increasing payments uniformly regardless of patient risk.

Answer: (C)

Risk adjustment levels the playing field by accounting for patient complexity when paying plans and evaluating performance. Medicare Advantage and MIPS enroll patients with varying health needs, and sicker populations drive higher costs and different outcomes. By assigning risk scores to enrollees using diagnostic information (like HCCs), payers estimate expected costs or resource use and adjust payments accordingly. This means plans that cover more complex patients receive higher payments to reflect those higher costs, and performance measurements are adjusted for risk so providers aren’t unfairly penalized for treating tougher cases. In short, incorporating patient risk scores normalizes for health status, preventing selection bias.