ACA individual market risk scores jumped 5% in a year: An expert breaks down why

Health plans participating in the Affordable Care Act individual market saw an increase in average risk scores from 2014 to 2015, which indicates an increase in the health plans' predicted expenses.

Under the ACA risk adjustment program, individual risk scores are calculated based on demographic and health status information and are weighted to form the basis of the average risk score, which represents health plans' predicted costs. Health plans with lower average risk scores make risk adjustment payments to other insurers, while plans with higher average risk scores receive risk adjustment payments from other insurers.

The Center for Consumer Information and Insurance Oversight recently released information about risk adjustment transfers based on risk scores for insurers that participated in the individual 2015 ACA markets.

A study of CCIIO's 2014 and 2015 data by the Society of Actuaries found average risk scores increased 5 percent from 2014 to 2015. Author of the study and SOA researcher Rebecca Owen said many determinants affect the increase in risk scores.

"I think a lot of people are immediately saying the health of the population decreased, but you have to be cognizant," Ms. Owen said. She said the 5 percent increase could reflect "plans have gotten better at identifying risk scores or the timeliness of diagnosis."

Ms. Owen said other determinants may affect the increase, such as better input data, more healthcare used by previously uninsured Americans and plan changes, among others. However, she said some of the most telling data in SOA's study are state-by-state comparisons of 2014 and 2015 average risk scores.

In the West, the change in risk scores from 2014 to 2015 was lower than in the Southeast. According to CCIIO data, Nevada saw its average score decline by 8.4 percent while Alabama saw a 17.3 percent hike.

"That may mean some integrated health systems are better at reporting scores, or the population is more likely to have scorable conditions," Ms. Owen said. "There's a little bit of everything. Noting that variability, it's really important that we examine all of these changes in the nature of the market on a state-by-state, even plan-by-plan basis."

When asked how exits from the ACA exchanges — like those of UnitedHealthcare and Aetna — will affect risk scores in the future, Ms. Owen said "we can expect the risk scores to reset to zero and payers to reassess risk." She expects this shift will not change the overall risk pool, but could prolong the time needed to stabilize risk scores in the marketplace.

SOA will complete a small group version of its study and will follow up with further analysis and more specific conclusions once CMS releases medical loss ratio data. 

More articles about payer issues:
Republicans urge Speaker Ryan to sue Obama administration over insurer settlements
75% of Illinois counties will house 2 or fewer ACA insurers
What BCBS' departure means for Tennessee: 3 takeaways

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Top 40 articles from the past 6 months