On May 7th and 8th, the Center for Consumer Information and Insurance
Oversight (CCIIO) held a public meeting on risk adjustment, the
process through which, under the Affordable Care Act (ACA), funds are
transferred from health plans that attract relatively low-risk
enrollees to plans that attract relatively high-risk enrollees,
such as individuals with chronic health conditions. The risk adjustment program was created to promote
greater stability and to reduce the potential for adverse selection
in the individual and small-group markets.
Senior officials from the Department of Health and Human Services (HHS)
provided details regarding the approach that HHS intends to take
toward risk adjustment when acting on behalf of states as well as
the procedures and standards by which states that choose to
administer their own risk adjustment programs can obtain
certification for alternate methodologies. Officials provided
important information, including the following:
HHS intends to use a concurrent model (as opposed to a
prospective model) when it runs a state's risk adjustment
program. Under this model, each individual's risk score for a
given year will be determined based on that individual's
diagnoses during that same year, rather than previous years'
diagnoses.
HHS does not intend to adjust its risk adjustment
calculations to account for payments that insurers might receive
under the ACA's temporary reinsurance program.
HHS is considering the plan liability (as opposed to a total
medical expenditure) approach to risk adjustment. This approach
attempts to take into account the different cost-sharing models
that plans can have.
HHS is considering using a risk pool average premium (as
opposed to using a plan's own premium) for establishing the
baseline premium necessary to calculate and balance payments and
charges.
Data collection issues received considerable attention from both
presenters and audience members. Under a final rule released on March 16th, HHS will use
a "distributed data collection" approach when it operates
a risk-adjustment program in a state, which means that each
individual's claims data remains with the insurance issuer. A
state that runs its own program can use an alternate methodology,
but the rule establishes standards that limit a state's ability
to collect individually identifiable information. Many commenters
expressed concern that these restrictions could preclude states
from leveraging existing data systems and from collecting enough
long-term data to accurately perform risk adjustment. While the
presenters provided little detail in response, they did indicate
their belief that both the use of claims databases and the tracking
of an individual's claims information are feasible under the
final rule.
The PowerPoint slides for the presentations can be found at:
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