How Does Risk Adjustment Work?

Risk adjustment in medical care is an extremely complex and multifaceted process, but it can be simplified for the sake of introduction. All processes involved in risk adjustment are meant to achieve one final goal, which is that of preparing accurate, secured (medically coded), comprehensive, and legally compliant medical documents.

These documents may include everything from the patient’s diagnostic and treatment information to their insurance details (private or public). In other words, risk adjustment is about accurately and compliantly documenting every process involved in a patient’s healthcare, so that risks of inadequate treatment, delayed reimbursements, and potential litigation can be minimized against worst-case scenarios.

Risk Adjustment: The 3 Core Principles

Risk adjustment works primarily based on three fundamental principles which are universally applicable in healthcare. Now, ample adjustments will still be required to adapt the core principles to best suit the specific situation, which is why MRA specialists are needed for successfully managing medical risk adjustment. Nevertheless, every healthcare executive in a leading position should at least be aware of the fundamental principles of successful risk adjustment. Let’s take a quick look through them next.


Accuracy is the single most important aspect of medical risk management because a single error can lead to devastating consequences for multiple parties. Professional medical coders must ensure that they are using the most relevant and best suited documentation process to record the data.

They must pay attention to ensure that the discrepancies between recorded data and coded documents are minimized, if not eliminated. Both undercoding and overcoding the data are known to be responsible for such discrepancies, so a good degree of professionalism and experience is necessary.


Quality in medical risk adjustment refers to the quality of methods applied to foster a meaningful and effective connection between the member and the provider. Of course, it also refers to documenting the actual quality of the connections that currently exists or previously existed between the members and their providers. The documentation should focus on:

  • Whether genuine effort was made to connect with the member in an effective, relevant manner.
  • Whether timely medical care was made available to the member.
  • Whether the member and the provider could establish aligned goals.
  • Whether the member-provider interactions were perceived as positive and beneficial.


Even the most accurate documentation would be meaningless if it was not complete in every way that it needs to be. Although the scope here is too large to mention everything without factoring in a specific case, comprehensive medical risk adjustment data is expected to include:

  • Complete documentation and coded submission of all encounters and interactions between applicable parties (healthcare providers and members).
  • Supplemental documentations, as and when needed.
  • Compliancy check to ensure that all applicable regulatory and legal guidelines are maintained.

It should be noted that just as inaccurate documentation can lead to big problems, incomplete data documentation can also compromise the entire risk adjustment and management process. Double check before submitting to the CMS and/or the HHS so that the final reimbursements are calculated after adjusting against all potential risks. It also ensures that timely payments are processed.