Use of risk adjustment in setting budgets and measuring performance in primary care II: advantages, disadvantages, and practicalities

Abstract

Risk adjustment could help to improve decisions about budgets as well as help measure the performance of doctors. In the first of these two articles we discussed why risk adjustment could become more important in the United Kingdom and how it works in the United States.1 In this article we consider the benefits and problems of risk adjustment and assess how one US system would perform in the United Kingdom. #### Summary points Use of risk adjustment in the United Kingdom could help ensure that general practices and primary care trusts are not penalised for taking on patients with complex health needs Risk adjustment methods may also help ensure that computerised clinical records in primary care are complete and accurate Risk adjustment could add to the administrative complexity of healthcare systems It may draw attention away from the overall level of healthcare spending There is no gold standard method of risk adjustment Use of risk adjustment in setting budgets and monitoring performance should be explored further In the United States, risk adjustment is starting to be used to adjust capitation or other types of payments to healthcare providers such as family practices, multispecialty medical groups, or consortiums of physicians and hospitals (integrated delivery systems).2 For large populations (such as that of a broad geographical area), age, sex, and ecological measures may be adequate for this purpose. But for smaller populations, such as those managed by one family practice or a small consortium of physicians, risk adjustment helps ensure that providers who manage patients with more complex medical problems have their budgets adjusted to take this into account (box). The use of risk adjustment systems has also given doctors and health maintenance organisations a powerful incentive to provide more accurate and complete diagnostic data.1 #### Potential advantages of risk adjustment