Risk Adjustment Affects Plans on Health Insurance Exchanges
While initially CMS did not find that higher costs were related to consumers who enroll through the health insurance exchanges for only part of the year, the AMGA begged to differ.
By - The trade association AMGA, which entails a large membership of medical groups and healthcare delivery systems, submitted comments last week to the Centers for Medicare & Medicaid Services (CMS) regarding its proposal to change risk adjustment methodology for health insurance plans that are sold through the state health insurance exchanges.
The AMGA comments back the CMS proposal for factoring partial year enrollees with more costly medical care under the risk adjustment methodology, according to a company news release. The organization also suggest for CMS to consider socioeconomic and sociodemographic aspects before finalizing any plans to modify risk adjustment for any health plans currently being sold through the health insurance exchanges.
“While the white paper does not discuss in any detail, CMS does mention the use of socioeconomic and sociodemographic factors in risk adjustment. ‘In the longer term,’ CMS notes at page 35, ‘we would like to explore the possibility of using socioeconomic status or other sociodemographic factors as predictors in the risk adjustment model.’ We encourage CMS to do so. The research shows there is an empirical relationship between socioeconomic status, race and ethnicity, and health care outcomes,” a letter from the AMGA stated.
Additionally, the AMGA also supports the CMS proposal to consider patient prescription drug use and high-cost enrollees when it comes to updating the risk adjustment methodology.
The AMGA letter sent to CMS Acting Administrator Andy Slavitt commented on the issues surrounding partial year enrollment or those consumers who enroll in a plan through the health insurance exchanges in order to manage an expensive episode of care and then abruptly remove their coverage after their medical care is completed.
While initially CMS did not find that higher costs were related to consumers who enroll through the health insurance exchanges for only part of the year, the AMGA begged to differ. The reasoning is that the proposals were based on modeling a commercial data set, which entails mostly employer-sponsored health insurance plans. This means more nuanced small group market plans involving complex health conditions may paint a different picture when it comes to partial year enrollment, the AMGA letter states.
Essentially, the AMGA and its membership is concerned that partial year enrollment processes could actually increase costs for health payers unnecessarily. Additionally, the letter mentions that the CMS proposal outlines in a white paper that it is beneficial to add prescription drug use “as a risk adjustment marker.”
Essentially, CMS clarified that using prescription drug information could close any gaps in data when it comes to missing diagnoses because of inadequate documentation in medical claims data. This type of drug data could paint a clearer picture of the kind of severity a patient’s disease may pose as well as help prevent health plans from minimizing access to drug prescriptions by posing high out-of-pocket costs.
However, it is possible that access to this type of information could lead healthcare providers to over-prescribe medication in order to obtain larger reimbursements. There are significant variations in drug prescriptions and medication utilization rates which could affect the analytics of prescription drug data.
For instance, low-income consumers who purchase health plans through the health insurance exchanges tend to have lower rates of prescription drug use. Additionally, many medications are used “off-label” and the prescribing behaviors of physicians often diverge.
The AMGA comments in the letter their support of the CMS “flexible/generalized” for analyzing either diagnoses of medical conditions or prescription drug use. The AMGA letter outlines how risk adjustment often doesn’t accurately predict the costs of medical care for consumers who have health needs significantly above the average beneficiary.
The letter states that CMS may benefit from “reducing issuers’ exposure to outliers via modifications to the HSS risk adjustment model.” Selling health plans through the state and federal health insurance exchanges has a variety of implications for payers.
The financial impact of utilizing this marketplace has been leading to a net loss among various major health payers. For instance, Aetna lost $140 million in 2015 when operating through the exchanges.
Aetna Chief Executive Mark Bertolini has had some issues with the marketplace. In general, participation in the health insurance exchanges seems to be on a decline among payers. UnitedHealthcare is one major insurer looking to stop participating in the exchanges in 2017. Nonetheless, some experts feel that payer participation in the marketplace will continue.
“To me, in the conversations that I have with executives all across the healthcare continuum including insurers, hospital systems, or clinicians, they’re more concerned with both the business and delivery of healthcare. They have business concerns like ensuring high quality care is delivered in a profitable manner,” Bill Fox, Vice President of Healthcare and Life Sciences at MarkLogic, told HealthPayerIntelligence.com.
“I think they see the exchange as part of this ecosystem that exists now and the healthcare field will always have to adapt to changing policy and innovation,” he concluded. “There’s always parts that some people don’t like, some people do, and some people think they need to change some aspects. It’s a huge piece of legislation. There’s always going to be tweaking and it can always get better.”
As time marches on, lawmakers may need to make changes to the structure of the Affordable Care Act and insurance exchanges in order to keep health insurers operating through these new systems.
