Health insurers in the individual and small-group commercial major medical market are starting to learn how to cope with the Affordable Care Act risk-adjustment program.
For 2014, the program shifted amounts equal to about 10 percent of individual major medical premiums and 6 percent of all small-group premiums from issuers with what look, on paper, like low-risk enrollees to issuers with enrollees with high risk scores.
The percentages for 2015 will probably similar, program managers at the Centers for Medicare & Medicaid Services said in a report on health insurers’ estimated ACA reinsurance receivables and A risk-adjustment transfer amounts for 2015 that was released June 30.
Related: Top 10 ACA reinsurance magents
For Congress, putting a health insurance risk-adjustment program in the legislation that created the Patient Protection and Affordable Care Act of 2010 was a no-brainer.
CMS was already using a risk-adjustment program to help Medicare Advantage plan issuers offer coverage on a guaranteed-issue basis, and cope with the tendency of sicker patients to flow into certain plans.
Issuers in both the Medicare Advantage risk-adjustment program and the Affordable Care Act risk-adjustment program gather information on enrollees’ health. Program managers then decide which issuers have accumulated more than their fair share of risk and shift the extra risk to plans with low risk scores.
But the ACA risk-adjustment program is different in an important way: CMS is supposed to pull cash directly from some insurers and push it to others.
In the Medicare Advantage risk-adjustment program, CMS acts as the risk-adjustment engine, by changing how much cash it sends plan issuers. There, issuers need not send cash directly to competitors, or worry about whether competitors will pay their risk-adjustment bills.
When insurers are dealing with the ACA risk-adjustment program, the amount of cash they get may ultimately depend on whether competitors make good on risk-adjustment obligations. The adjustment formula is complicated, and smaller, newer plans have argued that the current systems is biased against smaller, newer plans that have less information about their enrollees.
Insurers can appeal the preliminary risk-adjustment bills given in the June 30 report.
For a look at the 10 plans with the biggest preliminary individual market risk-adjustment bills listed in that report, read on:
Trees are tougher in Arizona. (Photo: Thinkstock)
10. Meritus Health Partners
Risk-adjustment bill: $48,452,998.55.
Managing risk in and around New York City is not always easy. (Photo: Allison Bell/LHP)
9. Healthfirst PHSP
Risk-adjustment bill: $48,556,174.15.
Fidelis serves many Medicaid plan enrollees in the New York City area. (Photo: Allison Bell/LHP)
8. New York State Catholic Health Plan (Fidelis)
Rego Park, New York.
Risk-adjustment bill: $56,655,138.64.
Several insurers complained about health claim patterns in Georgia. (Image: Thinkstock)
7. Coventry Health Care of Georgia Inc.
Risk-adjustment bill: $58,546,619.35.
Florida has sent HealthCare.gov more enrollees than any other state. (Photo: Allison Bell/LHP)