The Arizona Health Care Cost Containment System (AHCCCS has recently updated the methodology for risk adjusting capitation rates paid to ACC MCOs. With the recent recognition of the impact that socio-economic factors have on an individual’s well-being1, health outcomes, and health care cost, several state Medicaid programs have begun to incorporate a limited number of social risk factors (commonly referred to as social determinants of health (SDOH) into their risk adjustment methodologies.

The objective of this paper is to answer several questions that might be of interest to similar agencies in other states looking to implement SDOH into their payment methodologies:

• What impact does incorporating SDOH risk markers into CDPS+Rx model have on MCOs’ risk transfers and financial position?
• Does incorporating SDOH risk markers into the CDPS+Rx model improve payment accuracy?
• What specific SDOH risk markers provide the most significant contribution to risk scores?

SDOH And Risk Adjustment: Arizona Medicaid Innovations