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.
A contract between a State Medicaid agency and a MCO or other managed care entity under which the entity agrees to provide, or arrange for the provision of, a specified set of services to enrolled Medicaid beneficiaries in exchange for a fixed monthly capitation payment on behalf of each enrollee. By entering into such a contract, the MCO is assuming the financial risk of providing covered health services to the enrolled population.
A contract payment methodology between HCFA and an HMO or CMP that requires the delivery of (at least) all covered services to members as medically necessary in return for a fixed monthly payment rate from the government and (often) a premium paid by the enrollee. The HMO is then liable for those contractually offered services without regard to cost. (Note: Medicaid beneficiaries enrolled in risk contracts are not required to pay premiums.)