Medicare Study Shows Fair Payments for Diverse Populations Are Possible

Medicare’s payment system could be adjusted in new ways to ensure that health plans are paid more fairly when caring for those from different racial and ethnic backgrounds. In a new study published in JAMA Health Forum , it was found that changes to current risk adjustment formulas could reduce disparities without disrupting how the system functions overall.

Risk adjustment is a key part of how Medicare pays private health plans.

Some patients cost more to care for than others, and plans should not be punished for taking on sicker patients. Without accurate risk adjustment, plans can get fewer funds than they need to cover these higher costs, leaving them short financially to care for these patients.

To prevent that, Medicare uses algorithms that predict expected healthcare costs