BLOG: Why risk adjustment can’t wait

Issuers understand that risk adjustment of products both on and off the exchange is a necessity, not an option. But given the competing priorities and fundamental operational tasks that must be accomplished first, many issuers are taking a “risk adjustment can wait” approach.

The Affordable Care Act (ACA) remains full of uncertainty and has forced issuers to work with less than perfect information. With so many unknowns, issuers are accomplishing those tasks necessary to simply operate on the exchange-edge server implementation, product development, pricing and promotion, enrollment, etc. Risk adjustment is far down the list, and the issuers that I’ve spoken with tell me that it will be second quarter, at the earliest, when they will even start to think about risk adjustment on the exchange.

Consider an alternative point of view about the value and purpose of risk adjustment.

Risk adjustment’s intent is quite straightforward: capturing the right information about your members to deliver the right care to those members. In a climate of uncertainty, issuers may know little about these individuals, the disease acuity of these members, what competitors are doing, and what the key actuarial price points should be. Isn’t risk adjustment the one activity that can actually help address some of these uncertainties?

Moreover, imagine a scenario where a plan waits to implement their risk adjustment efforts until later in 2014. By not having given themselves enough time to execute, they may not be able to adapt to the evolving marketplace. Let’s look specifically at concurrent chart reviews, as an example, and the situation when an issuer waits until the fourth quarter of 2014 to begin those reviews.

As long as everything goes smoothly, starting the reviews in the fourth quarter of 2014 and finishing up the chart reviews in time for the April 2015 submission should be easy, right? Perhaps not.

For example, for Medicare Advantage plans who already manage risk adjustment, the January and March 2015 sweeps deadline may limit your resource availability in the latter part of the fourth quarter of 2014. Moreover, providers also have competing priorities and may simply not be ready to allow your team to collect and review their charts in a timely manner. From our experience as a veteran risk adjustment vendor, your timelines need agility.

The bottom line is if the issuer does not leave themselves enough time for risk adjustment on or off the exchange, three things can happen:

• The information they have about their members will continue to be incomplete;

• Their ability to intervene with care management efforts among those members that need help will be compromised; and

• Depending on market share, if their competitors are doing a better job of risk adjustments, given the zero based budget reality of the ACA, they’ll take a significant financial hit.

Options to Get Started

1 Identify the Internal Lead

Several of our Medicare Advantage clients have broadened the responsibility of their existing revenue manager to oversee risk adjustment on the exchange. If a plan doesn’t have risk adjustment experience, oftentimes someone within the finance department or care management department will take on this role. Either way, someone within the issuer needs to acquire ownership of risk adjustment.

2 Convene an Internal Planning Committee

Convening a team of individuals that represent all the key departments that will be impacted by risk adjustment is the next key step. And this is not as straightforward as you might expect. Too many plans have neglected all key departments. The committee cannot be comprised only of finance, provider relations, care management, and IT. It must include member services, product development, legal, corporate communications, and sales and marketing. Given the multiple facets of risk adjustment, each and every one of these core departments will be a constituent impacted by risk adjustment efforts.

3 Consider Vendor Approaches

A number of excellent vendors exist in the health insurance exchange risk adjustment space to help your plan get started and/or manage your efforts going forward. Some vendors focus on one piece of the risk adjustment puzzle, analytics for example, while other vendors provide any and all components of the risk adjustment continuum. A quick Google search will point you in the right direction or, if your plan has risk adjustment expertise, a handful of vendors are already top of mind.

4 Develop a Plan of Action

The table below illustrates the risk adjustment activities in which an issuer can engage and is a resource for issuers to complete to help guide their plan of action. Those items with a star are the activities that we recommend issuers engage in during 2014. We have also checked off when we think those activities should occur and in which quarter(s) in 2014. The two “impact” columns A) list the internal operations impact for your plan and B) denote the external impact to your provider network. The issuer competency and capacity columns are designed for your plan to ask yourself the tough questions-do we have the competency to handle this in-house and, if so, do we have the capacity to accomplish it or should we look to an outside vendor for support?

5 Evaluate the Work Effort and Adapt Accordingly

Again, an issuer must adapt to the market and this can only be accomplished by evaluating and measuring the risk adjustment work effort. What’s working versus what’s not working? Are the preliminary results what the issuer expected? If they differ from your expectations, changes must be made and can only be done so given enough time to implement them.

With proper planning, an understanding of the urgency around health insurance exchange risk adjustment, and a commitment to prioritization and conducting those activities that really matter, issuers can get started sooner than they realize with their risk adjustment activities.

Kim Browning is Executive Vice President of Cognisight, LLC. Cognisight is a nationally recognized organization specializing in risk adjustment services for Medicare Advantage Plans, PACE Plans, Medicaid Managed Care Plans, and Issuers on and off the Health Insurance Exchange. She can be reached at kbrowning@cognisight.com.