Plans ramp up risk adjustment to serve legions of new members

Assuming no cataclysmic changes occur to alter the current health reform law, state-based health insurance exchanges will go live Jan 1, 2014. The exchanges might bring more than 20 million new customers to the health insurance market, and cause millions more to move from their current small group and individual plans into the exchange plans. In this article, the authors explore the central role that risk adjustment will play as health plans gear up to serve legions of new members in a manner that includes robust, data-driven risk assessments. As they explore below, doing so is inextricably linked to the successful implementation of the healthcare exchanges and, in turn, the Patient Protection and Affordable Care Act itself. Regardless of whether the system is state or federally designed, risk adjustment will have five basic components: 1. risk adjustment model, 2. calculation of plans' average risk, 3. calculation of plan payments from or to the system, 4. data collection approach, and 5. audit provisions.