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.
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.