Risk Adjustment is classified as which type of payment system?

Risk Adjustment is classified as a prospective payment system because it involves setting payment rates based on anticipated health care needs and the expected costs of care before services are provided. This approach uses demographic and diagnostic information to adjust payments for health plans, aiming to accurately reflect the risk profiles of enrolled beneficiaries.

In a prospective payment system, payments are determined in advance based on certain criteria, which contrasts with retrospective systems where payments are made after services are rendered and may reflect the actual costs incurred. This helps ensure that health plans are adequately funded to care for patients with varying health statuses, while also incentivizing efficiency and value in care delivery.

The other payment systems differ significantly in their structure; retrospective payment systems typically reimburse after care is provided based on actual costs, fee-for-service systems charge separately for each service provided, and case rate payment systems offer a fixed payment for a set of related services. Understanding the differences among these systems is essential in grasping how payments are structured and their implications for health care delivery and financing.