It is intended to minimize any financial incentives health plans may have to select healthier than average enrollees. In this process, health plans which attract higher risk providers and members would be compensated for any differences in the proportion of their members that require high levels of care compared to other plans. A statistical method of paying managed care organizations different capitated payments based on the composition and relative healthiness of their beneficiaries. Anticipating the cost of providing health care to groups of enrollees. Actuarial assessments examine utilization history, demographics, health characteristics, environmental attributes, and other sociological, economic and market characteristics.
Risk assessment can also include, less commonly, the identification of etiology of health problems.
An organization that assumes financial responsibility for the provision of a defined set of benefits by accepting prepayment for some or all of the cost of care. Providers and provider organizations, if capitated, can also be risk bearing. A risk contract is broadly any contract which results in any party assuming insurance or business risk. Normally this means, in health care, that if either the employer, health plan or provider assumes risk, it is agreeing to cover the expense of increased utilization beyond the projected costs or payment provided. Normally risk is assumed by the health plan or insurance carrier but can be carried by the provider in capitated arrangements or by the employer in self-insured arrangements.