Risk-Adjustment Reimbursement May Fall Short in Some Cases

Risk adjustment must be effective to achieve insurance market reform and expand coverage to new enrollees.

Policy changes are needed to increase risk-adjustment payments for special enrollment period (SEP) enrollees. A new study in Health Affairs, the current payment-adequacy difference between full-year members and SEP enrollees has a high probability of increasing.

SEPs allow consumers to sign up outside of the open enrollment period (OEP) when certain life events, like losing employer-sponsored health insurance due to unemployment, occur. Previous literature estimated that 30 million Americans spend a period during the year without insurance as a result of job loss, with only 5% of this population enrolling into SEPs.

In 2017, HHS changed risk adjustment to include the length of time a person was a plan member with a carrier. This increased payments for SEP enrollees and those who enrolled during an open period but lost coverage in the same year. Payments will increase again in 2018 on the basis of prescription drug category factors that signal the severity of conditions, making enrollees more of a risk to carriers. In addition, insurance companies believe SEP enrollees are more of a risk in general, explaining their increased payments.

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