Risk Adjustment

DIY or Vendor: Should You Partner for Risk Adjustment Services?

Written By
Andrew Perlstein

With the recent changes to the existing risk adjustment model and the higher percentage of encounter data that will make up risk scores, health plans are now focused more than ever before on ensuring they’re prepared to secure the same RAF.

While health plans of all sizes can have dedicated, in-house risk adjustment teams, they have their own unique challenges. For example, while large health plans often have robust analytics teams and ready access to internal data sources, it can be advantageous to gather insights from third-party risk adjustment experts who may be able to analyze data more objectively. For example, vendors may be better equipped to ingest and normalize data from multiple disparate sources to provide a comprehensive view of a health plan’s risk adjustment landscape.

When it comes to medium-sized health plans who cover 50,000 to 150,000 members for example, they may have in-house teams and long-term partnerships with risk adjustment vendors, but they lack the personnel, processes, or technology to independently manage all aspects of their risk adjustment programs. In this case, they need a partner that can complement their in-house resources.

As health plans of all sizes look ahead, having a comprehensive understanding of the pros and cons of either partnering with a vendor to support their risk adjustment programs or handling it in-house will be key to their success.


In-House Risk Adjustment: Pros


Oftentimes, health plans who opt to manage risk adjustment in-house do so because they believe they can better interpret the data. They also have subject matter experts (SMEs) who can provide insights into a specific component of the program.

Some health plans also choose to handle risk adjustment completely in-house because they know their membership populations best. They know about other ongoing initiatives—such as provider education—outside of their department that could potentially impact some of their strategies to improve metrics associated with risk adjustment. If they’re focused on engaging their providers, they want to have a vendor who doesn’t have that same visibility and makes oblivious and counterintuitive recommendations.


In-House Risk Adjustment: Cons


At the same time, there are drawbacks for health plans that decide to handle risk adjustment entirely on their own. While they may be able to build their own teams to manage programs, a permanent team can’t always conduct a comprehensive analysis of their own performance in comparison to other plans.


Risk Adjustment Services Vendor


For health plans that are already partnering with a vendor for retrospective chart review or chart retrieval, one of the key benefits to expanding to full-service risk adjustment consulting is seamless integration. Since the vendor has access to a client’s data, the vendor can conduct an analysis and quickly share insights based on what they’re already seeing. Instead of wasting time trying to locate or validate data, end-to-end risk adjustment services allow for real-time data analysis that improves the efficiency of targeting and documentation.

With comprehensive risk adjustment services, health plans get insight into what has worked for other clients of similar size, geographies, scope of work and more. A risk adjustment vendor can offer effective strategies and best practices that have worked for their clients. They can complement the existing work being done in-house by offering a fresh perspective and new strategies to identify opportunities to close gaps in care.

For example, an Episource client wanted to have more detailed insight into their data, a better handle on RAPS/EDS reconciliation, and have the ability to place a financial value on leakage from missed HCCs and inaccuracies. The client already had an internal risk adjustment team and a vendor who handled their submissions. However, as a result of their partnership with Episource, they were able to identify $400,000 in potential reimbursement.


What To Look For In a Risk Adjustment Services Vendor


Full Transparency

Many vendors do not allow their clients to have complete visibility into data analytics or the logic behind recommendations. When choosing a vendor, health plans should look for partners that offer transparency into the process. A vendor needs to easily explain their conclusion, the steps it took to get there, and how it’s rooted in the data.

Complete visibility into data fosters collaboration. If there were incorrect assumptions made leading up to the vendor’s conclusions, those can be adjusted earlier when a client is aware of the steps in the process as they are happening. Otherwise, the client may find out 6 months later there was a fundamental flaw that cannot be course corrected. Full transparency allows the in-house risk adjustment team at the health plan to have control over their adjustments.


When looking for a risk adjustment vendor, it’s important for health plans to find flexible partners. Vendors should be able to tweak their risk adjustment analytics logic and make changes when requested. Plans should have direct access to the vendor’s SMEs to understand how they made their conclusions. SMEs who regularly work with clients will understand how to address concerns clearly and in a timely manner.

A Dedicated Account Manager

It’s important to seek out vendors that have one dedicated account manager who handles the entire scope of risk adjustment services within the engagement, whether that’s full-service consultancy only or in conjunction with other services. Since the dedicated account manager already has inherent knowledge of the health plan, he or she can advocate for the appropriate resources needed in order to exceed project expectations, influence the product and decision-making assumptions, and build collaboration among all teams.


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