ACA Risk Adjustment: A Competitive Advantage

With ACA enrollment reaching an all-time high, we want to address the importance of ACA risk adjustment. The expanding healthcare landscape under the ACA and the continuous shift to value-based care means effective risk adjustment is often the difference between profitability and losses for you and your regional competitors.

The ACA risk adjustment program is, in many ways, similar to Medicaid. The program offers financial support to cover higher risk members, mitigating the associated higher cost. Still, as a “zero-sum” reimbursement pool, there aren’t the returns that risk bearing organizations can expect under Medicare Advantage.

However, that doesn’t mean it’s any less important to get right.

A health plan’s average actuarial risk is determined by the individual risk scores of its enrollees. Appropriately capturing it comes down to two KPIs, identification of risk adjustable conditions, and capturing those conditions when care is delivered. Only a minority of ACA members have any risk adjustable conditions at all, but that doesn’t mean they can’t have a small impact. Even 20% of patients with risk adjustable conditions can impact the population score.

With the non-traditional enrollment period added this year, finding the best picture of new enrollees as possible and establishing the relevant RAF, especially with care volumes still impacted by COVID-19, is more important than ever.

Despite the uptick in enrollment, the zero-sum regional reimbursement pool for ACA populations can often make it a low priority for risk adjustment programs. So, why are we emphasizing it?

It ultimately comes down to competition within that pool and protecting appropriate reimbursements for care provided. If two risk bearing organizations in the same region have identical populations and costs, the organization that takes the steps to identify and capture the RAF for the population is going to receive a larger piece of that reimbursement, and they will do so at the expense of all other regional participants.

To reiterate: ACA risk adjustment doesn’t just help your organization build a more accurate picture of the conditions your members or patients are living with, inevitably impacting their future care, it’s also a competitive advantage or, at the very least, protection against loss.

Risk adjustment impacts transfer payments and has implications on premium rates.  The competition in the ACA Marketplace drives this home, especially at a point where premium prices are an outsized economic strain on people already struggling. So, ACA participants that underestimate their risk may underprice their premiums and further jeopardize revenue, while also attracting a much higher number of new enrollees with unknown health risks. On the other hand, overestimating risk may result in health plans raising their premium rates and losing membership because they are not as competitive in the ACA Marketplace. In all cases, complete and accurate risk adjustment is protection against these outcomes.

So, what should you do?  You have already likely analyzed your regional performance and know it well. The next step is leveraging a clinically-trained NLP solution to provide you the competitive edge you need, and we would love to help support that initiative.

Improving Risk Adjustment with Edifecs

Risk adjustment processes are no longer a luxury or an afterthought. They are a competitive necessity. Health plans that choose to participate in the ACA Marketplace must establish sophisticated, technology-driven risk adjustment processes that can scale with the growing membership. Edifecs’ track record for payers and providers alike is not in question. The ROI and productivity lift may be just what you need to support an optimized ACA risk adjustment program and cement your competitive advantage.

For more information on attaining more accurate risk adjustment, contact us.