Study on State-based Risk
Adjustment in the Individual &
Small Group Market
Stakeholder Meeting
April 28, 2015
1
Study Background
• Legislative direction: assess the feasibility and potential
costs and benefits of operating the risk adjustment
program in the state
• Evaluate the extent to which Minnesota’s All-Payer Claims
Database (MN APCD) data could be used for conducting statebased risk adjustment;
• Collect data needed for the study;
• Conduct analysis to determine if a Minnesota- based risk
adjustment model can perform better and be more cost-effective
than the federal risk adjustment model; and
• Submit a report to the Legislature outlining the study
recommendations by October 1, 2015.
2
Preliminary Study Timeline
• May 5, 2015 - RFI
• July 2015 - Webinar to discuss feedback from the federal risk
adjustment model for which results are released in June 2015
• May - July 2015 - Collection of additional data needed for the study
• May - July 2015 - Evaluation of MN APCD for risk adjustment
readiness
• August/September 2015 - Completion of risk adjustment modeling
• September/October 2015 - Webinar to discuss preliminary results
from modeling
• October/November 2015 - Final report delivered to the Legislature
3
Risk Adjustment – Regulatory Background
ACA requirement
• The Affordable Care Act (ACA) requires that a permanent risk
adjustment program be established in each state
What the program does:
• Under the statute, provides payments to issuers with plans that have
higher-than-average “actuarial risk,” funded by payments from
issuers with plans that have lower-than-average “actuarial risk.”
Goals of a risk adjustment program
• Stabilize premiums inside and outside of the exchanges
• Mitigate the effects of potential “adverse selection” among issuers to
make carriers agnostic to who they enroll
Types of health plans the program applies to:
• All insured individual and small group health insurance plans and
coverage in a state
• Exceptions: grandfathered plans; student health plans; plans that are
not subject to the ACA’s market reforms (e.g. “early renewal” plans
and transitional plans)
Role of the state and
HHS in risk adjustment
• States that operate an
Exchange have the
option to also operate
their own RA program
• In states that do not
administer their own
program, HHS will
administer RA.
• If a state administers its
own program, it may
choose to either use
HHS’s RA methodology,
or develop its own RA
methodology – (subject
to certification by HHS)
4
Key Project Activities
Startup Activities
•
•
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Kick-off meeting
RA regulatory briefing
Stakeholder open meeting
Data Collection
•
•
•
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Data collection specification
Establish connectivity and protocols
APCD receives additional data and applies DQ controls
APCD provides merged data extract to MDH
APCD Readiness
•
•
Data gaps, reasonability, variance by submitter
Recommendation for APCD data collection for risk adjustment
Actuarial and Risk Adjustment Modeling
•
Develop and test four risk adjustment models, including the HHS model
Final Report and Recommendations
•
Summarize all findings and formalize recommendations
Ongoing Activities
•
•
Communication with stakeholders, project workshop and MDH leadership
Project management meetings
5
Potential benefits of / factors against
State-operated RA
 We hope to identify the types of benefits that would make state-based risk adjustment
worthwhile, as well as factors that would weigh in favor of continuing to have HHS
operate RA using the federal methodology
 Focus here is on analysis to inform study – not to suggest that any particular view or
recommendation has been formed
Benefits might include:
• Operating the system at a lower overall
cost (relative to the risk adjustment user
fees associated with federal operation)
• Ability to tailor risk adjustment to the
State’s market, data infrastructure, and
needs
• Ability to respond to specific issues or
concerns that arise in the State context
Factors weighing against State-based RA
might include:
• Value of having a methodology that is
uniform with that used in other states
• Resources that might be required for stateoperated risk adjustment (both for initial
start-up, and for ongoing operations)
 We are seeking stakeholder feedback and input on key considerations at this meeting
and on an ongoing basis
6
Considerations relating to using a
Minnesota-focused RA methodology
Addressing state-specific concerns and state market
environment
• Calibrated to state-specific care costs, utilization, network designs, etc.
• Possibility of administrative simplification by alignment with other state
programs: Basic Health Program, Medicaid, other programs
Alignment with broader state policy goals / regulations
• Alignment with market reforms
• Alignment with insurance regulation generally
Operational and cost considerations
• Administrative simplicity
• Minimizing costs – such as in relation to current costs reflected in user fees
7
Policy considerations for a risk adjustment
methodology
• Addressing adverse selection: level of effectiveness generally and in
•
•
•
•
•
relation to populations with special needs such as the disabled and those
with complex health conditions
Minimizing opportunities for “gaming”
Effect on incentives for good care management, wellness programs, etc.
Interaction with innovative payment models
Predictability
Approaches for taking into account geographical differences in cost
8
Additional Technical and Operational
Considerations
Approaches to data
collection
Risk Adjustment
Data Validation
(RADV)
Simulations
Transparency
• Potential for increased simplicity, standardization, and
cost-effectiveness through use of the MN APCD
• Resolving risk adjustment data quality issues
• Potential for more streamlined approaches
• Conducting statewide risk score simulations during the
benefit year, providing information to help plans predict
• Transparency in methodology design / operations
9
Contact & Additional Resources
• Health Economics Program Home Page
• www.health.state.mn.us/divs/hpsc/hep/index.html
• Risk Adjustment Study
• http://www.health.state.mn.us/divs/hpsc/hep/riskadjustment/index.html
• Contact:
• Anne Krohmer, [email protected], 651-201-3764
• Stefan Gildemeister, [email protected], 651-201-3554