The term “risk adjustment” means different things to different people depending on their role. The Centers for Medicare & Medicaid Services’ (CMS) textbook definition is that risk adjustment is “a statistical process that takes into account the underlying health status and health spending of the enrollees in an insurance plan when looking at their healthcare outcomes or healthcare costs.”

The truth is, risk adjustment—and the complex nature of the processes involved—is often misunderstood. In its simplest terms, risk adjustment ensures that the health conditions, health status, and demographics of the beneficiaries in a Medicare Advantage or an Affordable Care Act plan are accurately documented—and that the health plans managing those beneficiaries are adequately compensated for that management. Cotiviti's white paper explains the three fundamentals health plans must be successful in to have a highly successful risk adjustment program.