Health care reform will bring many changes to providers and health plans this year, as provisions from the Affordable Care Act (ACA) go into effect. This article, the first in a two-part series, focuses on risk adjustment and its affect on health plans and providers.
Key ACA Reforms for 2014
The Affordable Care Act (ACA), signed into law in March 2010, was designed to: increase the number of Americans with health insurance, encourage insurers to compete on the basis of price and quality, and promote disease and medical management. Significant reforms that took effect January 1, 2014 include:
- An individual mandate requiring most Americans to obtain health insurance or face a penalty
- Requirement that all products be reviewed by the state’s Department of Insurance, with stricter rules on premium increases
- Requirement that health plans no longer create coverage exclusions or charge higher premiums based on pre-existing conditions
- The creation of risk spreading programs for individual and small group markets
Risk Adjustment Program
The ACA’s risk adjustment program creates a mechanism to protect against insurer risk selection, promote market stability, and encourage competition on the basis of quality and value. The program measures and compares the relative health status among health plans’ membership by calculating average risk scores.
Plans with a relatively low average risk score will make payments into the system, while plans with relatively high average risk scores will receive payments. The aim is to balance risk among health plans, eliminating any incentive to select or avoid members based on health status.
Coding and Risk Score Accuracy
Complete and accurate reporting of diagnoses by physicians drives the accuracy of risk scores. Coding gaps or incomplete coding can skew the risk score. As a result, complete and accurate coding by providers and billing staff is a focus of health plans, like Harvard Pilgrim, this year. Risk adjustment creates an opportunity for health plans and providers to review coding practices and identify and correct common coding gaps. Next month’s issue of Network Matters will include the second installment in this three-part series.