Modernizing Medicare Risk Adjustment and Performance Measurement

Name of the paper with a doctor in lab coat in front of an ipad on which is display holograms of pills, hearts, and charts

White Paper

Modernizing Medicare Risk Adjustment and Performance Measurement

Risk adjustment of person-level payments are foundational for Medicare Advantage (MA), the Medicare Shared Savings Program (SSP), and other accountable care organization (ACO) programs in Traditional Medicare to encourage accountable health plans and provider organizations to attract and retain beneficiaries regardless of their health status. However, there is mismatch between the current risk adjustment system based on fee-for-service (FFS) claims and the increasing number of Medicare beneficiaries in accountable care arrangements. This white paper provides an overview of the challenges with the current risk adjustment system and highlights why this is a critical time to modernize the system, as existing efforts by the Centers for Medicare and Medicaid Services (CMS) to implement a strategy to reduce burden and improve clinical data used for performance measurement, creating an opportunity for alignment across quality and risk adjustment reporting technologies.

In this white paper, Duke-Margolis researchers propose a path forward to address the challenges to effective risk adjustment in MA, SSP, and other CMS person-based payment and care reforms to ensure accountable care payment relies on clinical meaningful data and not FFS claims. Key steps proposed in the paper to modernize risk adjustment and performance measurement are:

  • Set a clear vision and strategy for modernizing accountable care payments and reporting for both risk and quality based on reliable data derived from EHR systems used to support and improve care delivery
  • Implement a transition path for aligning risk adjustment and performance reporting from electronic health record systems that are the “source of truth” for care management to improve outcomes and lower costs
  • Implement a transition path for using accurate and representative MA and SSP data sources to calibrate risk adjustment models
  • Identify initial focus areas for phasing in risk adjustment reforms alongside performance measurement reforms, starting in areas of high need and expanding over time
  • Develop routine audit systems designed to work directly with electronic health source data to validate risk adjustment and performance measurement reporting
  • Build on the modernized data framework for risk adjustment and performance measurement to drive further improvements in payment accuracy and performance, while continuing to reduce administrative burdens

Click here to read the paper.

Duke-Margolis Authors

Mark McClellan

Mark McClellan, MD, PhD

Director of the Duke-Margolis Institute for Health Policy
Robert J. Margolis, MD, Professor of Business, Medicine and Policy
Margolis Executive Core Faculty

Sara Debab Headshot

Sara Debab

Policy Research Assistant

Frank McStay Photo

Frank McStay, MPA

Assistant Research Director


Mark Japinga, MPAff

Research Associate

Robert Saunders

Robert Saunders, PhD

Senior Research Director, Health Care Transformation
Adjunct Associate Professor
Executive Team Member
Margolis Core Faculty