Given the structure of the U.S. health care market, there is no single form of risk adjustment across payers. The Medicare program uses risk adjustment in the design of its alternative payment models. There is risk adjustment for individual and small group plans participating in the exchange established through the ACA. States operating an exchange have the option to either establish their own state-run risk adjustment program or allow the federal government to run the program. States choosing not to operate an exchange or marketplace (and thus utilizing the federally-run exchange, called the Health Insurance Marketplace) do not have the option to run their own risk adjustment programs and must use the federal model. The Federal model is based on individual risk scores that take into account an individual’s age, sex, and diagnoses. )