ACP calls for risk adjustment overhaul to improve health equity, cut red tape

© Andrey Popov - stock.adobe.com

The American College of Physicians (ACP) is calling for big changes to how risk adjustment works in the U.S. health care system, saying outdated methods are hurting both patients and physicians.

In a policy paper published July 1 in the Annals of Internal Medicine, ACP outlines eight key reforms intended to improve how payers account for patient complexity in reimbursement. The goal: reduce inequities, cut red tape and ensure physicians are paid fairly for the care they provide.

Standardization, transparency and simplicity

Risk adjustment plays a central role in determining physician payment, especially in Medicare and commercial value-based programs. But with different models and coding rules across programs, the process can be inconsistent, confusing and ripe for inefficiencies.

“The existing approach to risk adjustment presents several challenges that impact the provision of care, including significant time physicians must spend on extensive documentation and coding that could otherwise be devoted to engaging with patients,” said Jason M. Goldman, M.D., MACP, ACP president.

To fix that, ACP is calling for standardized methods and clear guidelines across all sectors of health care. The paper argues that aligning documentation practices would reduce confusion and lower administrative burden.

Fixing the data problem

Disconnected data systems are another major issue. With patient information scattered across platforms, it’s difficult to get an accurate picture of a patient’s health. ACP calls for investment in health IT and adoption of shared data standards like Fast Healthcare Interoperability Resources (FHIR) to support better interoperability.

The group also wants to end the practice of annually resetting diagnosis codes — known as “zeroing out” — which forces clinicians to re-document chronic conditions every year just to maintain accurate risk scores.

Addressing disparities and preventing gaming

ACP makes a strong case for the inclusion of social drivers of health risk models. Patients facing housing insecurity, food scarcity or other barriers often have more complex health needs — but current models don’t always reflect that.

ACP also warns against system “gaming,” like upcoding diagnoses and boost payments. The group says economic incentives should be aligned with patient care, not documentation tricks.

AI could help, if used responsibly

ACP sees promise in artificial intelligence (AI) and machine learning (ML) to enhance the accuracy and adaptability of risk adjustment models — but only if applied with caution. The paper stresses that these technologies should be evaluated for bias and impact.

One potential solution: hybrid models that combine past and current data to give a more complete, real-time view of patient health. These could be especially helpful in tracking fast-changing conditions or long-term complex care needs.

ACP’s recommendations speak to longstanding frustrations about the time and effort required for coding and documentation. A smarter, fairer system, ACP argues, would allow clinicians to focus more on care and less on bureaucracy.

“An improved needs-based payment system would benefit physicians and patients alike,” Goldman said.

The timing of ACP’s call for reform comes as risk adjustment practices in Medicare Advantage and other value-based programs face heightened scrutiny, including from regulators investigating fraud and abuse.

If adopted, the changes ACP proposes could have a broad impact — not just on payment models, but on how equity and quality are built into the economics of health care.