What type of contract does a Medicare risk program operate under?

A Medicare risk program operates under a risk contract. In this context, a risk contract is an agreement between Medicare and a health plan where the health plan is paid a set amount per enrollee to provide Medicare-covered services. This means that the health plan assumes the financial risk for delivering those services, which can include hospital visits, outpatient care, and other healthcare needs.

The financial arrangement allows for predictable costs for Medicare while incentivizing health plans to provide effective and high-quality care. By managing care efficiently, providers can maintain lower healthcare costs, which is essential in managing the overall budget of the Medicare program.

Other options may not relate to the essential nature of this type of contract. For example, adverse selection refers to the situation when high-risk individuals enroll in a health plan at higher rates than low-risk individuals, but this concept describes a problem faced in health insurance rather than a contract type. Quality assurance programs are focused on maintaining a standard of care rather than financial agreements. A flexible benefit plan typically allows customization of benefits for members, which differs fundamentally from the arrangement described in a risk contract. Thus, a risk contract is the correct answer as it best defines the operational framework of a Medicare risk program.