Special enrollment period enrollees can choke individual major medical plans because they come in looking somewhat healthier than other enrollees but actually use more care.
The gap between special enrollment period enrollees and open enrollment period enrollees shrank between 2014 and 2015, but, even in 2015, the gap was still big enough to throw off insurers’ expectations about how much new enrollees’ care will cost, and to turn an Affordable Care Act program that’s supposed to be a life preserver into a guillotine.
Analysts at Avalere Health, a Washington-based consulting firm, have published data supporting those conclusions in a new analysis of 2014 and 2015 claims data.
Avalere is now a unit of Bowie, Maryland-based Inovalon, a health care data company. When Avalere analysts sifted through the Inovalon data, they found that the 2015 special enrollment period enrollees kept their coverage for an average of just 3.6 months, compared with an average of 7.8 months for ordinary enrollees.
The 2014 special enrollees cost an insurer an average of $454 per month in claims, or 16 percent more than the $391-per-month average for ordinary enrollees.
Even though those 2014 special enrollees cost more than ordinary enrollees, they arrived with medical records that gave them an average Affordable Care Act risk-adjustment program risk score of just 1.12, or 18 percent lower than the average of 1.36 for ordinary enrollees.
In 2015, the special enrollees had average health costs of just $407 per month, or 4.6 percent more than the average of $389 for ordinary 2015 enrollees.
But the 2015 special enrollees still had an average of risk-adjustment score of 1.12, or 20 percent lower than the average of 1.4 for ordinary 2015 enrollees, according to the Avalere analysis.
One problem for insurers is that the new special enrollees might drive up claims costs more than expected.
Another problem is that the special, healthy-looking, high-cost enrollees might hurt an insurer’s ability to get help from the ACA risk-adjustment program, the analysts say.
The ACA risk-adjustment program is supposed to act like a life raft for issuers in the individual and small-group major medical markets. (Image: National Insitutes of Health)
ACA risk-adjustment problems could threaten system’s life
Before 2014, most states let issuers of individual major medical coverage hold down claims by rejecting people with health problems, charging people with health problems higher rates, or limiting the scope of coverage for sick people.
In January 2014, the Affordable Care Act replaced that medical underwriting system with an almost-total ban on medical underwriting.
Regulators, ACA exchange managers and insurers tried to control claim risk by setting up the open enrollment period system, or limits on when people can buy individual major medical coverage without showing they have what the government believes to be a good excuse for buying health coverage.
The open enrollment period for 2017, for example, is supposed to start Nov. 1 and end Jan. 31.
The system is supposed to pull healthy people into the health insurance market, and frighten them away from the idea of paying premiums only when they expect to have big medical bills.
The Centers for Medicare & Medicaid Services has been trying to strengthen the system by tightening enforcement of special enrollment period application rules for HealthCare.gov. Many state-based exchanges have tightened their own application review programs.
The ACA drafters also tried to give health insurers a life raft: the ACA risk-adjustment program.
That program is supposed to use a Hierarchical Condition Categories risk-scoring system to assign risk scores to health plan enrollees.
Individual and small-group plans with an unusually large number of enrollees with high risk scores are supposed to get cash from plans with enrollees with low risk scores.
But, if some insurers are more likely than others to attract enrollees with thin medical records and huge claims, that “can have adverse implications for issuers,” the analysts say.
The Avalere analysts say policymakers in Washington can still fix the exchange system’s problems.
Policymakers can solve the thin-medical-record, high-cost patient problem by continuing to tighten enforcement of eligibility rules, improving risk-management programs, and, generally, making the exchange program more attractive to issuers and enrollees, the analysts say.
Today, for example, the risk-adjustment program managers use a risk-scoring system based on information for Medicare enrollees. Using a risk-scoring system that reflects the kinds of conditions the young people in ACA exchange plans have could make the program work better, the analysts say.
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