One of the requirements tucked into the HIX landscape is a requirement for QHPs (Qualifying Health Plans–insurers participating in the exchanges) to submit de-identified plan level information to CMS for the purposes of risk adjustment and reinsurance. One of the major concerns by the health insurance industry was trying to price premiums for a newly insured membership that maybe utilizing health resources more frequently than expected b/c they have lacked health coverage in the past. In other words, this population would be getting treated for medical conditions they previously had not gotten treated b/c they didn’t have health insurance. What this means to an insurance company is the expense (claims paid) would be higher than the premium they initially set for them. This also means they would either not make any money off this population or could even potentially be in the red because of this. A concession made by the Obama administration to offset this is for the Federal government to underwrite any excessive utilization of exchange members by creating a risk adjustment and reinsurance program. The Federal government would monitor at a plan level the risk QHPs were facing and institute stop/gap measures to offset losses to an insurer’s bottom line. This is similar (but very different in the details) to what CMS does for Med Advantage members w/the RAPS process. However, unlike the RAPS process, the QHP submits de-identified claims data into the EDGE server (b/c this server sits on the ‘edge’ of a QHPs operations) that is loaded w/CMS software, calculates risk scores at the plan level, and both the plan and CMS can generate detailed analysis and reports from it.
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