Participating in the commercial insurance exchanges isn’t easy. Plans have to develop a strategy for selling to individuals, set premiums, explain their network offerings to an entirely new consumer set, and orchestrate care for an unexpectedly sick population. Plus, they do all this in the face of intense public pressure and scrutiny. It’s no wonder that risk adjustment often falls to the bottom of the priority list most of the year.
However, commercial plans that truly wish to succeed should make risk adjustment a year-round priority, for a couple reasons.
Reason #1: Transfers can be significant.
For the 2015 risk adjustment transfers averaged 10% of premiums in the individual market and 6% of premiums in the small group market. High risk adjustment transfers were a contributing factor to several plans’ decisions to leave the exchanges, including Oscar Health (-$33M) and HealthyCT (-$13.4M). There’s no way around it— poor risk adjustment reporting means financial trouble for plans on the commercial exchanges.
Reason #2: Everyone gets audited.
In Medicare Advantage, only 5% of plans get audited right now, although a recent proposal might change this. In contrast, under commercial risk, all plans get audited through Initial Validation Audits. HHS selects a sample of members to audit, and reviews enrollment documentation, claims and encounter data, and medical record documentation. The need for accuracy is very high.
Reason #3: There’s a compressed reporting timeline.
Each Commercial risk adjustment HCC must be submitted with a claim appended. Since claims often lag treatment by up to 90 days, all coding needs to be completed as soon as possible, to account for the claims lag. Additionally, risk adjustment charges for each benefit year are expected to be completed 6 months after the year is over— quicker than the Medicare Advantage timeline, as there are no sweeps.
Commercial risk adjustment is high stakes, and there are important reasons to be diligent in choosing the best vendor. To learn more about Apixio’s HCC Profiler for Commercial Risk, contact email@example.com