What is the nature of the risk adjustment methodology?

• A. Retrospective
• B. Prospective
• C. Hybrid
• D. Static

Answer: (B)

The main idea being tested is whether risk adjustment is designed to forecast future costs rather than just reflect past spending. The best description is prospective because the methodology is used to anticipate future resource use and set payments for an upcoming period based on a patient’s current health status and historical information. This forward-looking approach allows plans to align payments with expected risk before costs are incurred, helping to prevent cross-subsidization and incentivize appropriate care.

Retrospective would base adjustments on what happened after the period ends, which is not about predicting future risk. A hybrid approach mixes both, but the question emphasizes forward prediction. A static method wouldn’t adapt to new health information over time.