In risk-adjusted payment models, what is selection bias, and how is it mitigated?

• A. Selecting sicker patients to inflate costs.
• B. Selecting healthier patients to improve metrics.
• C. Randomly assigning patients to different plans.
• D. Using fixed patient eligibility criteria.

Answer: (B)

Selection bias in risk-adjusted payment models shows up when healthier patients are steered into certain plans to look better on costs and quality metrics. If a plan attracts or retains healthier individuals, its average costs and performance appear more favorable, not because care is better, but because the patient mix is easier to treat. That’s why this option best captures what the bias is.

Mitigation comes from risk adjustment, which tries to level the playing field by predicting expected costs based on patient health status, age, comorbidities, and other characteristics, and then adjusting payments to reflect those risks. This makes plans less able to gain by selective enrollment, since payments align more closely with the anticipated resource use of the enrolled population. Additional safeguards—clear patient attribution rules, regular updating of risk models, and, where feasible, coverage safeguards or reinsurance—help reduce incentives for selection and keep comparisons fair.