Medical risk adjustment refers to a process by which healthcare premium funds are allocated to match expected medical costs. Global capitation agreements are provider payment models in which a sponsoring party provides a fixed pro-rata funding allocation on a prospective basis to a service-providing party (such as health plan or provider) for the benefit of an eligible population).
The underlying challenge in managing medical risk adjustment in global capitation agreements is this: sponsor organizations contracting to pre-pay for services (and those entering agreements to provide them for an upfront fee) must find a way to estimate an appropriate amount to pay and receive. Adopting a framework to better manage medical risk adjustment, including continuously improving the efficiency of resource allocation mechanisms, can improve accuracy of estimates.
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