Controlling Risk Factors Flashcards
Module 3 (31 cards)
What 3 factors are typically used to predict the use of health services?
- Individual demographic characteristics
- Health Status
- Prior Utilization
What is the best predictor of individual use of health services?
Prior Utilization
Discuss three key points that emerge from the process of risk adjustment for the purpose of setting health insurance premiums
- Even the most complete set of measures explains only a small proportion of the variance in an individual’s use of services
- Some sets of measures are better predictors of health services use than are others
- Statistical modeling has its limits
The presumption in risk adjustment is that statistical methods will eliminate the:
Least costly efforts to attract low utilizers and avoid high utilizers
Describe the development of the Medicare payment methodology known as the Adjusted Per Capita Cost (AAPCC) to reimburse Medicare Advantage plans.
Because HMOs were thought to be more efficient than traditional care providers, the legislation prescribed that the capitated rate should be 95% of the average Medicare Part A (hospital) plus Part B (ambulatory) expenditures per beneficiary, adjusted by various factors including age, gender and Medicaid status.
What was the objective of the RAND Health Insurance Experiment
examine the effects of insurance co-payment arrangements on expenditures with the hope of improving the AAPCC model used by Medicare.
This study has been used to examine alternative predictive models of utilization based on demographic characteristics, subjective and physiological measures of health status, and prior utilization
RAND Health Insurance Experiment study
Which of the following measures has the greatest explanatory power relative to the others?
The RAND study findings show that when “prior utilization” was added to AAPCC demographic variables, the approach explained 6.4% of total expenditures, 2.8% of inpatient claims and 21.2% of outpatient expenditures.
Balanced Budget Act of 1997
Required Medicare to phase in a new risk adjustment methodology to better incorporate health status into their capitation rates and to reimburse Medicare Advantage plans higher amounts for “sicker” beneficiaries.
Is a risk adjusted payment system based on patient status measures?
Yes
The balanced budget act (BBA) requires Medicare HMOs and other providers to supply encounter data to the:
Centers for Medicare & Medicaid Services (CMS)
CMS Hierarchical Condition Categories
Estimates used from CMS to adjust the Medicare capitation payment. Also assigns diagnoses to hierarchical medical condition categories.
What are the ten guiding principles in Medicare’s risk adjustment approach?
- The health status-related measures should be clinically meaningful. Difficult for plans to assign a beneficiary with vaguely defined condition into a high payment group.
- Predict both current and future medical expenditures
- Based on large enough sample sizes
- Related clinical conditions should be treated hierarchically
- Vague measures should be grouped with low paying diagnoses to encourage specific coding of health conditions
- Should not encourage multiple reporting of the same related diagnoses
- Providers should not be penalized for reporting many conditions
- Transitivity must hold
- All diagnoses that clinicians use have to map into the payment system
- Discretionary diagnostic codes should be excluded to prevent intentional or unintentional gaming of the system
How is the annual Medicare Advantage payment under the CMS-HCC model determined?
A base rate (average annual Medicare cost) for a particular county is multiplied by factors associated with the member’s demographics and also with the member’s medical diagnoses (HCCs).
What happens if the Medicare Advantage plans bid to partially determine the Medicare payments they receive is BELOW the CMS established benchmark
The managed care plan keeps a portion of the difference to apply to reduced cost sharing or expanded benefits for enrolled beneficiaries.
What happens if the Medicare Advantage plans bid to partially determine the Medicare payments they receive is ABOVE the CMS established benchmark
The managed care plan charges enrollees an additional premium.
Is the CMS-HCC model used in all cases to adjust the payments for beneficiaries enrolled by the plan to reflect their demographics and health status.
Yes
Which three provisions of ACA aimed to address concerns over possible substantial differences in claims experience across insurers leading to premium volatility?
- Risk Adjustment (permanent)
- Reinsurance
- Risk Corridors
Why does the ACA’s guaranteed availability of insurance raise concerns of adverse selection?
Because consumers who are in need of health care may be more likely to purchase insurance
How does the ACA discourage behavior that could lead to adverse selection
- Makes is difficult for people to wait until they are sick to purchase insurance
- Limits on open enrollment periods
- Requiring most people to have insurance coverage or pay a penalty
- Provide subsidies to help with the cost of insurance
What is “risk selection”
Occurs when insurers have an incentive to avoid enrolling people who are in worse health and likely to require costly medical care.
Risk adjustment program (nongrandfathered individual and small group market plans, in/out of exchanges)
Redistributes funds from plans with lower risk enrollees to plans with higher risk enrollees. The goal is to encourage insurers to compete based on the value and efficiency of their plans rather than by attracting healthier enrollees.
Reinsurance program (all health insurers and self insured plans contributed funds)
Provided payment to plans that enrolled higher cost individuals. Reduce incentive for insurers to charge higher premiums
Risk corridor program (Qualified health plans)
Limited losses and gains beyond an allowable range. Aim was to cushion insurers participating in exchanges and marketplaces from extreme gains/losses
