Making risk adjustment work for everyone.

This article explores how to reward health plans that serve people with disabilities and residents of low-income areas. We analyze health care expenditure patterns for Medicaid-covered persons with disabilities in Ohio, Missouri, Minnesota, and Wisconsin, demonstrating that diagnostic classifications are predictably related to resource utilization, and that health care expenditures are much more predictable for persons with disabilities than for the nondisabled. The implications of this analysis for risk-adjusted payment systems are explored. We also consider methods of assuring that health plans will provide high-quality care to the residents of inner city neighborhoods.