Certified Risk Adjustment Coder (CRC)

What type of payment system does Risk Adjustment primarily utilize?

1. Prospective payment system

2. Retrospective payment system

3. Fee-for-service payment system

4. Case rate payment system

The correct answer is: Retrospective payment system

Risk Adjustment primarily utilizes a prospective payment system. In this model, payments are determined in advance based on the risk assessment of the patient population, which takes into account various factors, including health status and demographic characteristics. The aim is to allocate funds based on predicted health care costs, thus encouraging providers to focus on preventive care and effective management of patients' health conditions. In a prospective payment system, the provider is paid a predetermined rate for care, regardless of the actual services rendered, incentivizing efficient care delivery while managing overall costs. This system contrasts with a retrospective payment system, where payments are made after services are provided and typically reflect the actual costs incurred. Fee-for-service payment systems bill for each service rendered, often leading to higher overall costs without necessarily improving patient outcomes. Case rate payment systems offer fixed payment amounts for specific conditions or procedures, but they do not take into account the risk adjustment factors comprehensively as the prospective payment model does.