Module 3: Controlling Risk Factors Flashcards
What 3 factors are typically used to predict the individual use of health services?
Demographic characteristics, health status, and prior utilization
What does AAPCC stands for?
Adjusted average per capita cost
What is AAPCC (adj avg per capita cost) used for?
It’s a Medicare payment method to reimburse Medicare advantage plans
What was the objective of the RAND health insurance experiment?
To examine the effects of insurance copay arrangements on expenditures with hope of improving the AAPCC model used by Medicare.
According to the RAND study, what measure had the greater explanatory power?
Prior Utilization
What 3 provisions of ACA aimed to address concerns over possible premium volatility due to substantial differences in claims?
Risk adjustment, reinsurance, and risk corridors
Of the 3 provisions of ACA, which 2 expired in 2016?
Reinsurance and risk corridors
What is the Risk Adjustment Program and its objective?
Redistribute funds from plans with lower risk enrollees to plans with higher risk enrollees.
It encourages insurers to compete based on value and efficiency of plans by attracting healthier enrollees.
What is the Reinsurance Program and its objective?
Provided payment to plans that enrolled higher cost individuals.
The goal is to reduce the incentive for insurers to charge higher premiums due to ACA market reform that guaranteed the availability of coverage.
What is the Risk Corridor Program and its objective?
It limited losses and gains beyond an allowable range.
Its goal is to cushion insurers participating in exchanges and marketplaces from extreme gains and losses.
What entities participated in the risk adjustment program?
Non grandfathered individual and small group markets both inside and outside the exchange
What entities participated in the reinsurance program?
All health issuers and self insured plans contributed funds.
Individual market plans subject to new market rules were eligible for payment.
What entities participated in the risk corridor program?
Qualified health plans, which are plans qualified to be offered on a health insurance marketplace
What does risk corridors do?
Limits insurer losses and/or gains if claims experience is very different from what was expected
What is a one sided risk corridor?
The government pays insurers if their losses exceed a certain threshold
What is a two sided risk corridor?
Government pays insurers if losses scenes a certain threshold, and insurers pay the government if gains exceed a certain threshold
What’s the medical loss ratio requirement?
Limits the share of premium that go toward admin expenses and profits as opposed to being used to pay health care claims. If insurers fall below a certain threshold, they must refund a portion of the premium.
How does aggregate reinsurance limit risk for insurers?
It pays all or a percentage of claims once a private aggregate claims paid exceed a predetermined threshold, like 102% of expected claims. Insurers would keep all gains if actual claims are lower than expected.
What are supplemental payments?
Aka direct reimbursements These are payments made outside the normal capitation rate once a predefined trigger occurred.
What are prospective or retroactive midyear capitation rate adjustments?
An alternative to supplemental payments. Capitation plans could be altered to reflect the change in expected cost. Can be made prospectively or retroactively for increase or decrease rate changes.
What did the Balanced Budget Act of 1997 (BBA) require Medicare to do to their risk adjustment methodology?
- incorporate health status into capitation rates l
- reimburse Medicare advantage plans higher for sicker beneficiaries
- Medicare HMOs and other providers to supply encounter data to CMS
