The U.S. Department of Health and Human Services established risk adjustment data validation (RADV) as a mechanism to protect risk adjustment integrity by assessing certain data elements supporting risk transfers. Issuers in the individual and small group insurance markets seemed to be optimistic heading into the 2017 audit following the prior years’ RADV pilots. While most achieved a 0% error rate, many still experienced unfavorable 2018 risk adjustment transfers. In this paper, Milliman’s Cameron Gleed, Jason Karcher, and Jason Petroske discuss what happened.
Since the inception of the Patient Protection and Affordable Care Act (ACA), the U.S. Department of Health and Human Services (HHS) realized a validation process would be needed to “ensure the accuracy and consistency of the data” underlying risk adjustment. In August 2019, HHS released the results of the first issuer-level ACA risk adjustment data validation (RADV) audit. Many in the market are digesting what happened and what it could mean for their businesses. Milliman’s Cameron Gleed, Jason Karcher, and Jason Petroske break down the purpose and technical details of ACA RADV in this paper.
Many issuers participating in the Patient Protection and Affordable Care Act (ACA) have not put in sufficient effort to create a deliberate, comprehensive risk adjustment strategy. That could lead to lost opportunities and less certain financial outcomes.
The most successful risk adjustment management programs tend to be planned, firm-wide initiatives that recognize and account for the dollars at stake, the degree of government scrutiny, and the amount of people, processes, and technology involved.
In this paper, the first in a four-part series, Brandy Millen and Jason Petroske introduce risk adjustment management and discuss actions that can be taken to maintain its long-term success.
The Centers for Medicare and Medicaid Services (CMS) is adding a new prescription drug category classification system to the 2018 risk adjustment model. Starting in 2018, a condition will be identified through a Hierarchical Condition Category with associated medical diagnosis codes, a prescribed medication, or both—each one affecting the final risk member score differently. This paper by Milliman consultants approximates the likely CMS mapping based on the publicly available information to date.
Effective management of information entered into an External Data Gathering Environment (EDGE) server may save health plans millions of dollars in risk adjustment transfer payments. In this paper, Milliman’s Jason Petroske and Alan Vandagriff outline best practices that issuers should consider as part of their annual EDGE server submission cycles to maximize risk adjustment results.
Here’s an excerpt:
Complete and accurate data is a critical element in capturing—and, more importantly, in receiving compensation for—a health plan’s true level of risk. While navigating the first two years of EDGE submissions, we have mapped out a comprehensive action plan focused on three main areas that any issuer can integrate into its data management framework:
• Establish a robust review and reconciliation process: Create a continuous process for reviewing and reconciling EDGE submissions to internal data sources. Identify key metrics for data completeness and use the test environment to ensure each EDGE submission passes these standards before finalizing in production.
• Prioritize error corrections: Not all errors are created equal, so have a strategic plan for correcting errors and improving data quality. Understand the economics of risk adjustment to help effectively deploy and allocate resources.
• Track data quality and establish benchmarks: Track and benchmark data quality and submission results over time. Look for patterns in errors or outliers from prior submissions as these can be signals of systemic weaknesses in the overall data management process.
Risk adjustment transfer payments continue to have financial implications on insurers in the commercial individual and small group marketplaces. In this analysis, Milliman consultants provide an overview of 2015 transfer payments, comparing them against 2014 results. The authors also explore the following conclusions from their report.
• Total risk adjustment transfer payments at the national level remained at about 10% of premium in the individual market and 6% of premium in the small group market.
• Roughly one in four issuers offering plans in a given state or market in both 2014 and 2015 switched between payer and receiver status.
• Statewide risk scores rose more year-over-year than the movements in market demographics and average plan benefit richness would have suggested.
• Where available, the interim risk adjustment report did not provide a reliable indication of the ultimate value of the 2015 risk score.