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Risk Management in the Healthcare

Role of Risk Management

Risk management in healthcare is crucial and comprises clinical and administrative processes and tools used to detect, monitor, evaluate, and manage risks. These systems’ primary focus is safeguarding patient safety and minimizing medical errors that impact a facility’s healthcare spending and bottom line. However, as health technology is crucial to healthcare, pertinent issues such as data security, regulation, and legal aspects of reimbursement have made risk management more complex (Simsekler, Ward, & Clarkson, 2018). Moreover, with the transition to value-based care movement and contemporary risk-bearing models, including bundled payments and pay for performance programs, financial risk is increasingly shifting from payers to providers, altering the greater risk management area.

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General Trends in Legislature

The increasing collaboration between healthcare systems and health plans seeks to address patient or population needs and avail tailored solutions. The general trends in 21st-century legislation involve a greater focus on personalized health care. The Medicare Access and Children Health Insurance Program (CHIP) Reauthorization Act (MACRA) of 2015 motivates systems to prioritize patient needs as opposed to focusing only on illness (Clough & McClellan, 2016). It requires health systems to insurance contracts that are capitated or reimbursed through the value-based system. Another legislation, the Tax Cut and Job Act (TCJA), grants citizens the freedom to choose a preferred healthcare cover (Clough & McClellan, 2016). This law will have a long-term impact on mandated penalties effected through the Affordable Care Act (ACA).

Legislation and How It Governs Healthcare

The legislation (i.e., MACRA) changes the payment system for physicians who treat patients covered under the Medicare program. Its advent revised the Balanced Budget Act of 1997, bringing the most considerable change to America’s health care system following the enactment of the ACA in 2010 (Clough & McClellan, 2016). The act changes the Medicare reimbursement model adopted for providers while increasing funding. MACRA also extends the CHIP through regulations addressing incentives for using health technology. It created the Medicare Quality Payment Program that allows clinicians to participate in either the Quality Payment Program or use the Advanced Alternative Payment Models (AMPs) (Clough & McClellan, 2016). AMPs enable clinicians to earn their incentives while participating in innovative payment structures.

Motivating Factors

MACRA’s reimbursement system motivates physicians to move to other payment models. The legislation has also been encouraged by the need to reduce Medicare payments through more efficient structures. It is estimated that reimbursement to providers will decline from $106 billion to $35 billion annually as a result of implementing MACRA (Clough & McClellan, 2016). Additionally, incentives inherent in the other payment approaches contributed to the enactment of MACRA legislation.

Effects on Healthcare

MACRA extended the CHIP and reimbursement model by strengthening the dysfunctional Sustainable Growth Formula. The legislation has enhanced the quality of care, contributing to positive patient outcomes, prioritized factors like health information exchange, and increased focus on cyber safety measures to protect critical healthcare information (Clough & McClellan, 2016). MACRA’s reimbursement system incentivizes doctors to shift to more efficient payment models. As a result, Medicare spending has dropped from $106 billion to $35 billion (Clough & McClellan, 2016). It has also increased access to care in underserved areas.

Effects on Stakeholders

Patients have benefitted from increased access to health services in their communities. MACRA’s implementation has also greatly impacted rural and underserved populations due to the consolidation of physician practices. The net effect is increased access to healthcare by patients and more incentives for underserved providers (Hussey, Liu, & White, 2017). Additionally, the law has created a greater reliance on health technology to care, leading to more online e-prescribing by the medical staff and greater prescription use among patients. Computerized decision support systems have gained popularity, allowing standardization of care.


Clough, J. D., & McClellan, M. (2016). Implementing MACRA: Implications for physicians and for physician leadership. Journal of the American Medical Association, 315(22), 2397-2398.

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Hussey, P. S., Liu, J. L., & White, C. (2017). The Medicare access and CHIP reauthorization act: Effects on Medicare payment policy and spending. Health Affairs, 36(4), 697-705.

Simsekler, M. C. E., Ward, J. R., & Clarkson, P. J. (2018). Design for patient safety: A systems-based risk identification framework. Ergonomics, 61(8), 1046-1064.

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