Module 3

Question 1

This methodology is used to determine premiums based on expected utilization of the group.

Answer 1

Risk Adjustment Methodology

Question 2

These principles deal with insurance underwriting issues and provide safeguards to keep folks from gaming the system.

Answer 2

The guiding principles in Medicare’s Risk Adjustment Approach.

Question 3

When those who are unhealthy enroll in comprehensive coverage and healthy people forego coverage. This increases utilization and drives up plan costs.

Answer 3

Adverse Selection

Question 4

Known as “Cherry Picking”, this is when carriers design their products to be unattractive to people with expensive health conditions. This practice is discouraged.

Answer 4

Risk Selection

Question 5

The goal of this program is redistributing funds from lower risk enrollees to plans with higher risk enrollees. It encourages insurers to focus on value and efficiency and to not “cherry pick” just the good risks.

Answer 5

Risk Adjustment Program

Question 6

This temporary program, which expired in 2016, provided payments to plans with higher cost individuals to help control premiums prices.

Answer 6

Reinsurance Program

Question 7

This temporary program, which expired in 2016, provided a “cushion” for a range of losses and gains, minimizing extremes.

Answer 7

Risk Corridor Program

Question 8

Non-grandfathered individual and small group market plans can participate in this program.

Answer 8

Risk Adjustment Program

Question 9

All health insurance and self-funded plans could participate in this program operated by the states or HHS.

Answer 9

Reinsurance Program

Question 10

Qualified Health Plans (QHPs), which are plans offered on the public exchange (marketplace), could participate in this federally administered program.

Answer 10

Risk Corridor Program

Question 11

The Department of Health and Human Service (HHS) developed a certified risk adjustment methodology the states can use or have HHS use on their behalf.

Answer 11

Risk Adjustment Program

Question 12

In this manner, personally identifiable information (PII) isn’t shared.

Answer 12

Consumer privacy data is protected with de-identified data

Question 13

These are based on each individual’s age, gender, and any diagnosis.

Answer 13

Individual Risk Scores

Question 14

This is when premiums are not adequate to cover claims. If premiums are too high, there can be an unintended windfall.

Answer 14

Pricing Risk

Question 15

This is where the government pays an insurer if its losses exceed a certain threshold.

Answer 15

One-Sided Risk Corridors

Question 16

Medicare has been charged to better incorporate health status into its capitation rates and to reimburse Medicare Advantage plans via a risk-adjusted payment system. In order to do so, which of the following is being done?
A. The health status of the group is now a facet of capitation rates.
B. Identifiable individual consumer data (including PII) is examined.
C. Identifiable individual consumer data (including PHI) is examined.
D. Higher risk plans make payments to lower risk plans.
E. Cherry picking good groups is promoted.

Answer 16

A. There is now a process for risk adjustment of a group for the purpose of setting health insurance premiums. (Text, pp. 49-50)

Question 17

All of the following are true of the ACA risk adjustment program, EXCEPT:
A. In essence, funds are made available to plans with higher risk enrollees.
B. The program encourages insurers to focus on value and efficiency; not “Cherry pick” good risks.
C. It’s no longer in place, but it was great when it came out after the ACA was enacted.
D. This involves non-grandfathered individuals and small group market plans.
E. This permanent program has the goal of redistributing funds from groups with lower risk.

Answer 17

C. Aspects of the program as still in play today. (Study Guide, Module 3, pp. 65-67)

Question 18

What 3 factors are typically used to predict the individual use of health services? (Text, p.49)

Answer 18

1. An individual’s demographic characteristics
2. Health status
3. Prior utilization

*Prior utilization is the best predictor

Question 19

What is the objective of the RAND Health Insurance Experiment?

Answer 19

To examine the effects of insurance copayment arrangements on expenditures with the hope of improving the AAPCC model used by Medicare.

Question 20

How did the Balanced Budget Act of 1997 (BBA) change the risk adjustment methodology on which the AAPCC payment was based?

Answer 20

The BBA 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.

Question 21

What model assigns diagnoses to hierarchical medical condition categories?

Answer 21

CMS Hierarchical Condition Categories (CMS-HCC)