THE PRACTICE OF RISK ADJUSTMENT

This article focuses on risk adjustment under health care reform. It e xamines reasons for risk adjustment, how those reasons affect the meth od of adjustment, and practical issues that arise in the process of ad justing for risk. The paper concludes that adjusting payments to healt h plans makes the most sense. It advocates a risk adjustment agency th at is regionally based and supportive of the public good. For risk adj ustment to work, there must be a well-defined market and barriers to e ntry and exit.