Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Health Insurance

The nuclear potato

Your article was successfully shared with the contacts you provided.

Builders of both private and public exchanges are trying to figure out how to keep unreasonable amounts of health risk from rolling over some of the participants and burning them to a crisp.

Akshay Kapur, a management consultant at Booz & Co., and Ashish Kaura, a health services market specialist at the company, have been talking a lot about exchange risk-adjustment efforts in lately.

They’ve advised insurers, benefits firms and others about the implications of the Patient Protection and Affordable Care Act.

But one of the considerations that will affect whether those questions matter is whether the new exchanges even last.

Whether the new exchanges last longer than the business insurance purchasing clubs of the 1980s may depend on whether the exchanges can keep players from predatory pricing.

“The entire marketplace depends on how well they do risk adjustment,” Kaura said.

Medicare Advantage managers have been using risk-adjustment techniques based on detailed demographic and ICD-9 health diagnosis code data for years, Kaura said. Program managers try to use the system to help the carriers that have higher claims costs simply because they attract sicker patients.

The builders of the PPACA public exchanges can use three different risk-adjustment methods, including a risk-adjustment approach based on the Medicare Advantage risk-adjustment system.

The builders of the new private exchanges have been trying to find ways to create simpler but equally effective risk-adjustment methods, by relying simply, for example, on the age of each patient, the gender of each patient, and pharmacy data.

Kaura said the private exchanges have set up risk-adjustment committees, formal policies and appeals processes, just as the public exchanges have.

“This is not a once-and-done exercise,” Kapur said.

See also:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.