OLDWICK, N.J.--(BUSINESS WIRE)--Data released by the Centers for Medicare and Medicaid Services show that larger health plans mainly comprised the top companies with receivables under the Patient Protection and Affordable Care Act’s (ACA) permanent risk-adjustment program. All of the top 10 plans were insurers with capital and surplus balances over $300 million, according to a new A.M. Best report.
The Best’s Special Report, titled, “Some Companies Struggle With Parity Within The ACA Risk Adjustment Program,” notes that the risk-adjustment program, one of the programs that make up the so-called “3Rs,” was designed to transfer funds to plans with higher risk enrollees and a greater propensity of adverse selection to those with lower risk and generally lesser utilization rates. The risk-adjustment model is predicated on the financial risk of the enrollees, which, per the methodology utilized by the U.S. Department of Health and Human Services, is based on enrollee demographics and medical diagnosis codes to determine a risk score.
The CMS June 2016 report noted the directives for companies to either pay the risk adjustment to the federal government, or to expect a fund payment from CMS. The summary concluded that in some cases discrepancies from insurers’ initial estimates prompted regulatory actions by state insurance departments.
Also noted in the A.M. Best report was that the companies listed in the CMS data as payers into the risk-adjustment program were seven health insurers with capital and surplus balances less than $300 million. One question that has been raised is how much insurers’ technological capabilities and ability to capture diagnosis codes have affected their planning for this permanent program.
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=254752.
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