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Risk adjustment is increasingly recognized as crucial to refining health care reimbursement and to comparing provider performance in terms of quality and outcomes of care. Risk adjustment for mental and substance use conditions has lagged behind other areas of medicine, but model development specific to these conditions has accelerated in recent years. After describing outcomes of mental health and substance-related care and associated risk factors, we review research studies on risk adjustment meeting the following criteria: (1) publication in a peer-reviewed journal between 1980 and 2002, (2) evaluation of one or more multivariate models used to risk-adjust comparisons of utilization, cost, or clinical outcomes of mental or substance use conditions across providers, and (3) quantitative assessment of the proportion of variance explained by patient characteristics in the model (e.g., R(2) or c-statistic). We identified 36 articles that included 72 models addressing utilization, 74 models of expenditures, and 15 models of clinical outcomes. Models based on diagnostic and sociodemographic information available from administrative data sets explained an average 6.7% of variance, whereas models using more detailed sources of data explained a more robust 22.8%. Results are appraised in the context of the mental health care system's needs for risk adjustment; we assess what has been accomplished, where gaps remain, and directions for future development.
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