With the Affordable Care Act (ACA) came a permanent risk adjustment program to provide increased payments to health insurance issuers. Specifically, the program was created to help those issuers that attract higher-risk populations, such as members with chronic conditions, and reduce the incentives for issuers to avoid higher-risk enrollees. Under this program, funds are transferred from issuers with lower-risk enrollees to issuers with higher-risk enrollees.[1] This program was designed as a budget neutral program, which means by definition a payment to one issuer is a charge to another.
Issuers are keenly aware of the need to maximize the transfer payments coming into their organizations while minimizing the payments going out. There are several arrows in the quiver of the issuer to help them improve their payment status. However, before looking to maximize payments, issuers need to confirm the accuracy and reliability of their data. Inaccurate data is a low hanging fruit that is ripe for picking to generate positive business outcomes which is why insurers are acting now, prior to when the HHS Risk Adjustment Data Validation (HRADV) audits will occur.
HHS notified issuers in July 2015 that the first set of practice audits originally planned would not occur. The second round of audits will be performed in 2016 based on 2015 plan year data. With only one practice round, issuers will need to put their best foot forward to make the results count to make the practice audit as useful as possible. While issuers are justified in doing everything possible to maximize their transfer payments, they should not lose sight of their responsibility to ensure the integrity of this data.
Issuers should consider the following opportunities to maximize their risk adjustment transfer payments:
- Data Quality – An issuer’s responsibility for the quality of the data begins the moment that data enters the enterprise. While it is important to educate providers who are coding claims to ensure all data is coded accurately, issuers cannot directly impact the data until they receive it. From this point forward there are many things they can do including:
- Controls – Issuers should put controls on their data processes to make sure that no data is lost and that no critical data elements are transformed incorrectly. Quality checks should be used to ensure that the data received is formatted as expected. Any quality issues should immediately create an alert so that the issue can be resolved before it is pushed out to the rest of the organization. The sooner an error is detected the less expensive it is to fix.
- Reconciliation – Data that is received from external entities should regularly be reconciled with those external entities to ensure that they stay in sync. For on-exchange plans, member reconciliation is important to make sure that all of the data is complete and up-to-date. Reconciliation then continues to apply to the data as it traverses from system to system to ensure the data in motion maintains its integrity throughout the process. Assuming data is accurate is a recipe for errors to be overlooked until they grow into an issue that requires brute force to investigate and fix the root cause of the problem. The challenge is often that every stakeholder wants a quick fix while the root cause often is ellusive and the prescription to fix it is fraught with complexities.
- EDGE Server Data Submission – Be sure that your processes for collecting and submitting data to the EDGE Server accurately reflect all of the business rules outlined by CMS. You or your vendor must keep current with changes made to these rules. Your process should include an ability to queue up errors in the submission process to be worked in order to achieve the highest submission rate possible. The goal should be to get as close as possible to 100% submission success. Some plans have achieved as high as 99.6% submission rates. Start early, submit data on a regular basis and resolve errors as they occur.
- Use Analytics to Improve Care – In order to achieve a profitable ROI for your sickest members, utilize advanced analytics to identify the patients who need interventions. Personalize the interventions to what will resonate with each member to get them involved in their own health and well-being. Analytics can be used to show the method in which the member should be contacted and which intervention is most likely to work for each member. Members with well-managed conditions will have much lower costs and will help increase the amount of the risk adjustment transfer payments that you are able to keep.
- Use Predictive Modeling to Identify Members – Chart reviews are time consuming and there is not enough time or resources to review them all. Predictive modeling should be used to determine which members are most likely to have unreported diagnoses that are linked to HCCs and can provide additional reimbursement. This up-front analysis allows your team to focus their efforts on the right members with a high degree of accuracy.
- Reduce Fraud, Waste and Abuse – At the end of the day, issuers who put forth effort for all of the preceding activities deserve to benefit from their hard work. Unfortunately, there are a plethora of schemes out there that reduce the amount of money in the system available for those people and entities who play by the rules. Only by making it more difficult for people to cheat the system will there be revenues to be gained. Advanced analytics should be used to identify and expose entities who are contributing to fraud, waste or abuse.
Risk adjustment transfer payments can be a game changer for issuers. Work with your providers to make sure that they are coding claims accurately. From there the ball is in your court. Ensure data integrity with the proper controls and EDGE Server submission processes. Use advanced analytics and predictive modeling techniques to improve health, manage risk and reduce fraud, waste and abuse. Be ready for the HRADV audits. Once all this has been completed, you will need to wait until June following each benefit year to know for sure what the calculation of your organization’s risk adjustment transfer payments (or liability). You will have the confidence of knowing you did everything possible to get the best return.
[1] http://www.gpo.gov/fdsys/pkg/FR-2013-03-11/pdf/2013-04902.pdf