Prometheus Analytics is perhaps the most comprehensive system available for analyzing provider performance and developing and implementing value-based payment models around episodes of care. A critical feature of any episode grouper is the application of appropriate methods of risk adjustment to accurately and fairly account for individuals’ insurance risk in relation to episode costs. The purpose of this paper is to describe the methodology used to risk-adjust episode costs in Prometheus Analytics. It begins with a description of the development history of the method, as well as the key principles that guided its development. The next section lays out the methodology itself, describing the key clinical variables used.

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