Keeping it honest: New risk adjustment tracking system comes into play

Under the risk adjustment provision of the Affordable Care Act, insurers get a break for covering enrollees with riskier health conditions. Now to keep insurers honest when it comes to assigning risk scores to enrollees, the federal government is rolling out a large tracking system, according to LifeHealthPro.

The Centers for Medicare & Medicaid Services (CMS) is setting up rules for its new program that monitors the risk adjustment provision that gives health insurers an incentive to make enrollees look like they are sicker than they actually are, according to the report.

Under the risk adjustment provision, designed to prohibit risk selection by insurance companies, insurers with healthier members contribute to a fund that redistributes money to insurers that end up with riskier enrollees. That's a turnaround for insurers that in the past wanted to enroll the healthiest patients.

As part of the ACA, risk adjustment is one provision that is designed to make the insurance exchanges an easier place to operate by helping insurers manage the financial risk of covering everyone, including those previously uninsured consumers with potentially expensive health risks, while keeping premiums in check. So far, the U.S. Department of Health and Human Services (HHS) has apparently used the honor system when it comes to setting those risk scores for enrollees.

But it is now launching the HHS-Operated Risk Adjustment Data Validation (HHS-RADV) program to fight risk score inflation and is training health insurers on the new initiative, the report said. CMS wants insurers to sent it HHS-RADV reports by April 30, 2016.

Under the program, insurers need to now hire initial validation audit (IVA) companies that will review their risk score data and verify the information being sent to HHS, including codes used to show how sick an enrollee is. CMS will approve those IVA vendor choices in the spring.

Later, CMS itself will hire second validation audit (SVA) entities to validate the data that the IVA vendor reviewed and plans to publish 2015 error rate data by March 2017. CMS will use audit results to adjust insurer risk adjustment program payments starting with the 2016 benefit year, according to LifeHealthPro.

 To learn more:
- read the LifeHealthPro article

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