Adding Social Determinants to Medicaid Risk Adjustment Reduces Payment Volatility, Especially for Low-Morbidity Populations

Milliman research finds that incorporating social determinants of health into Medicaid managed care risk adjustment models produces modestly better payment accuracy and reduces financial volatility for MCOs and ACOs. The improvement is most pronounced for beneficiaries with lower medical complexity but higher social risk, where morbidity-only models systematically underpay plans—suggesting SDOH factors help correct revenue distortions when members face barriers to care that suppress diagnosis coding. The findings offer technical guidance for state Medicaid agencies considering updates to capitation rate-setting methodologies.

Managed Care · Finance

This is outside commentary from Milliman, not part of Medicaid Monitor's independently scored news coverage.

More from Milliman