For health plans serving the individual market, the Affordable Care Act's risk adjustment program generally worked as intended to shift funds from insurers with low-cost enrollees to plans with high-cost enrollees in its first year, according to a report by the American Academy of Actuaries' Risk Sharing Subcommittee.
"The results from the first year provide some evidence that the ACA risk adjustment program operated as it was designed to, but also suggest areas for further research to account for variations among insurers," said Barb Klever, chairperson of the American Academy of Actuaries' Risk Sharing Subcommittee.
Here are five takeaways from the report.
1. The more difficulty an insurer had in covering claims with premiums, the more likely it was to receive a risk adjustment payment in 2014. "This pattern is consistent with the shifting of funds from insurers with low-cost enrollees to insurers with high-cost enrollees," according to the report.
2. In the first year of the program, insurers with smaller market share experienced more variability in the risk adjustment payments they made or received. Researchers said this was to be expected, as smaller insurer enrollee populations are more likely to be skewed toward either lower-risk or higher-risk individuals.
3. Some insurers may have benefitted from more accurate coding or more effective processes for submitting enrollment and claims data in 2014, but these advantages may diminish over time as insurers gain more experience with risk adjustment.
4. "More research is needed to better understand the extent to which different financial outcomes among insurers are due to different premium levels, risk adjustment or other factors such as the types of plans offered and relative administrative expenses," the authors concluded.
5. Modifications to the risk adjustment model, such as incorporating an adjustment for high-cost outliers and incorporating pharmacy data, may be needed to further the program's goals, according to the report.
More articles on payer issues:
Changes to Partners' health plan limits access to care for poor at Boston Children's
There's an upsurge of short-term health insurance coverage: Here's why
Hawaii insurer forced to end business