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Tag: Kip Piper

How Health Plan Risk Adjustment Models May Change Under the ACA

Risk adjustment is a key mechanism to ensuring appropriate payments for Medicare Advantage plans, Medicare Part D drug plans, and Medicaid health plans.  Since health plans vary in their mix of healthy and sick enrollees, risk adjustment modifies premium payments to better reflect the projected costs of members served and compensate plans that enroll high-cost patients.

Historically, risk adjustment was only used in Medicaid and Medicare – in effect, redistributing some revenue from health or drug plans with a relatively healthier mix of members to those plans with a more costly enrollment profile.  However, the Affordable Care Act (ACA) extends risk adjustment to the individual and small group health insurance markets starting in 2014.

A new brief from The Synthesis Project tackles the issue and makes several interesting recommendations for how to improve risk adjustment methods for the post-ACA market. Without accurate risk adjustment, health plans have a strong financial incentive to seek out only the healthiest enrollees, especially under ACA-mandated adjusted community rating.  Under adjusted community rating, health plans may not vary premiums based on health status or sex and are limited in how much they may vary premiums based on age.  Under ACA, the healthy, the young, and men subsidize the health costs of the unhealthy, the older, and women.

Risk adjustment is therefore a necessary factor in stabilizing the dramatically new post-ACA health insurance marketplace, particularly the new Health Insurance Exchanges.  Even then, the ACA is a giant game of musical chairs.  The market under ACA will be chaotic and challenging, with a mix of winners and losers once the music stops and the dust settles, which will take at least three to five years.

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November is the New October

Many health care experts and journalists, including me, felt that the month of October would be the key barometer of the success of Healthcare.gov, the online health insurance marketplace that is a cornerstone of the Affordable Care Act.

But as days became weeks, and the problems plaguing the website stubbornly went unfixed, the question now is whether the administration can make the website work well by the end of this month and salvage the president’s signature achievement. If Healthcare.gov, which handles health insurance enrollment for 36 states, is working well at the end of this month, it will leave consumers just two weeks to choose plans if they want them to take effect on Jan. 1, 2014.

In other words, November is the new October.

The din of partisan accusations and counter-accusations is deafening and only getting louder. But in the interest of finding out what’s really happening on the ground, I consulted Kip Piper, who advises large health care organizations on Medicare, Medicaid, and health reform policy, finance and business strategy.

Piper has served as senior advisor to the administrator of the Centers for Medicare and Medicaid Services (CMS), Wisconsin state health administrator, director of the Wisconsin Medicaid program, a senior Medicare budget officer at the White House Office of Management and Budget, among other roles. He is articulate and clear-headed.

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What Your Employer Is Secretly Thinking As Obamacare Goes Live

Employers face a multitude of challenges under the Affordable Care Act (ACA).  The ACA fundamentally changes the landscape for employer sponsored health insurance, forcing businesses to understand, navigate, and adapt to a quickly changing, highly complex, and still uncertain marketplace for health benefits.  To illustrate this, here are 10 pain points employers face in dealing with Obamacare:

1.  Explaining ACA to Employees, Dependents, and Retirees:
Effective internal communications is a strong indicator of a firm’s financial performance.  Indeed, internal communications is an essential ingredient for an engaged, productive workforce with low turnover.  This is all the more important under the dynamics and complexities of the ACA.

Every employer must be prepared to explain the ACA.  Like it or not, employees will look to their employer to explain the Affordable Care Act, even if the employer is not changing benefits.  Employees have friends and family who will need help understanding Obamacare.  The airwaves, mail boxes, and street corners will be packed with messaging from all angles and interests – some pro, some con, some partisan, some factually wrong, some even fraudulent, much of it confusing, and all of it mind numbingly complex.

This is an enormous new opportunity for employers to beef up their internal communications, demonstrate leadership, and support employees and their families.  This will also serve to boost a company’s external reputation since the help and information provided to employees and retirees will be shared by them with a much wider audience – their parents, children, spouses, siblings, friends, and neighbors.

However, when communicating and educating, given the dynamics and contentious nature of Obamacare, employers must also take into consideration the political leanings of most employees and other key stakeholders, such as the board of directors and state and local leaders.  This is not a factor in most employer benefit issues but the ACA is entirely different.

2.  Making Tough Decisions on Coverage and Benefits:
While making tough decisions on benefits is nothing new for employers, the ACA presents a new set of decision points.  Every business has their own starting point – what, if anything, they were already offering, who they were covering, and how much they were contributing financially to the cost of coverage.

For those employers that were not providing full-time workers with health coverage before, the ACA creates a new pay-or-play decision for those with more than 50 full-time workers.  For every employer, the ACA creates a strong financial incentive to either drop coverage, dial-down employer contributions, or move to defined contribution.

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