One Way Health Plans Can Execute Risk Adjustment for a Better ROI

As a health plan, measuring the efficiency of your risk adjustment initiatives is a leading indicator for which programs are most effective.

Vendors may offer an acceptable return on investment on their services, but their program ROI is unlikely to improve over time. This is especially true when the vendor’s services are tied to volume. The vendor will be incentivized to provide a volume of service that may not be justified by suspecting logic. This additional work will provide marginally less value the more it is expanded. Services such as chart abstraction and in-home visits are particularly susceptible to this.

Ultimately, the best way to get the most out of a risk adjustment strategy is to bring it in-house. By bringing it under their own roof, health plans can establish the optimal volume based on budget or projected opportunity and can tightly control the level of work. On top of that, payers can avoid pressure from vendors to expand the work beyond a reasonable volume.

Building the capacity and infrastructure to perform risk adjustment in-house is a significant investment. It takes a sizable workforce to conduct chart abstraction and to implement an in-home visit program. Building these programs is a long-term investment in which a significant cost will be incurred upfront. However, this investment will lead to more sustained value over time versus contracting with a vendor is more of a transaction, not an investment. It can provide immediate value, but that value is unlikely to grow.

Bringing risk adjustment in house sustains value over time in three ways: 

1. Health plans can respond more nimbly to changes in the healthcare and risk adjustment landscapes (changes that are pretty frequent)
2. Organizations can more readily pinpoint how each program’s value shifts over time, and resources can be more efficiently allocated to the programs that are driving greater value. 
3. Health plans can coordinate internally with other parts of the business, such as care management and quality, to provide more comprehensive and cost-effective care for members. 

In healthcare, it can be difficult to plan for and invest in the future when every year brings different financial challenges for health plans. However, the challenges will only increase over time. Plans that want to remain viable into the future should begin investing in the business to sustain ROI over time.

Talk to one of our risk adjustment experts today to learn more about how you can best execute an in-house risk adjustment strategy.