Blue Cross and Blue Shield of Florida says regulators should create a new health insurance reinsurance program if they think the market needs that, but that they should not try to turn the Affordable Care Act risk-adjustment program into a reinsurance program for enrollees with very high claims.
The ACA risk-adjustment program is supposed to even out how much known enrollee health risk each insurer in the individual or small-group market has assumed, not protect the insurers against giant claims, Florida Blue writes in a comment letter.
If program managers try to use it to protect insurers against insurance claim risk, instead of enrollee health problem selection risk, insurers will have an incentive to restructure hospital contracts in a way that will maximize the amount of cash coming from the high-risk enrollee risk-adjustment pool, the Jacksonville, Florida-based carrier says.
“Given enough time, this gaming would not just corrupt the high-risk pool,” Florida Blue says, “It would undermine all of risk adjustment. Once the data catches up to the gaming, the average cost of conditions that are more likely to go over a million dollars and the average cost of lower-cost conditions drops… Once the risk-adjustment model is warped by bad data, it will warp issuer and provider behavior.”
Representatives from America’s Health Insurance Plans and the Association for Community Affiliated Plans also warned against the risk that creating a special risk-adjustment pool for the highest-risk enrollees could destabilize the system.
Some other commenters suggested that, with appropriate safeguards, a well-thought-out high-risk enrollee risk-adjustment program could help insurers compensate for the reality that commercial reinsurers will not protect a health insurer against the risk associated with people who come into a plan with known, severe health problems.
The risk-adjustment program
Those commenters and dozens of others were reacting to efforts by officials at the Center for Consumer Information and Insurance Oversight to improve the ACA risk-adjustment program.
CCIIO is the arm of the Centers for Medicare & Medicaid Services that runs ACA programs that affect the commercial health insurance market. It released a discussion paper on strategies for improving the risk-adjustment system in the spring, and it also held an in-person risk-adjustment system meeting for insurers. Last week, on a semiprivate health policy website, CCIIO posted a 179-page collection of public comments on its risk-adjustment discussion paper. The Florida Blue comments on the high-risk pool proposal come from that collection of comments.
The ACA now requires health insurers to offer healthy people and otherwise comparable people who have cancer or need organ transplants the same health coverage for the same price.
The risk-adjustment program is supposed to help insurers sell coverage that way without worrying they’ll end up with more than their fair share of enrollees with HIV or severe liver disease.
The program uses enrollee health information to give each enrollee a health risk score. Program managers are supposed to pull cash from insurers with enrollees with below-average risk scores and push the cash to insurers with high risk scores.
Some insurers have argued that the program is so confusing, and so slow to give insurers cash transfer payable and receivable information, that it’s killing insurers.
Commenters praised many CCIIO reform proposals, such as proposals for changing the way health risk scoring teams use information about what drugs enrollees are taking, but they also were quick to argue that changes that sound simple and harmless could make the risk-adjustment more complicated and less stable.
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