2024 Health Meeting - Session 10G: ACA HRADV Rating Factors 6.26.24 Recording

How well can we predict ACA HHS Risk Adjustment Data Validation (HRADV) results? Put another way, how susceptible is the current HRADV process to small sample volatility? What potential remedies are there to the current model's shortcomings? Every plan, regardless of how many members they have above the 1000 minimum, count equally if they qualify for an HRADV with how the result is interpreted, and the subsequent HRADV risk transfer ($330M in 2023). 200 stratified members and their associated HHS-HCCs (typically being between 400 and 450 conditions split between high, medium, and low failure rate results) have relatively low credibility, especially given the great diversity in documentation rates between plans and conditions. A market dominated by a single insurer that is risk-adjusting to itself will behave very differently than a competitive market. A small insurer cannot invest and be audit-proof as well as a large player. Is there a 'narrow network' advantage? The uncertainty of HRADV results leads to provisions for adverse deviation in pricing that ultimately make plans less affordable and reduce health equity. Also, uncertainty not only leads to greater premiums in the short term but also fewer participants and a less competitive market. Attendees will learn more about the HRADV process and the impact of the sample size and stratification process.