HCC risk adjustment formulas for ACA Exchanges

HHS announced the new risk adjustment formulas proposed for the ACA Health Insurance Exchanges on December 7, 2012.
Here is the citation and direct link.
Department of Health and Human Services. HHS Benefit and Payment Parameters for 2014, and Medical Loss Ratio. 2012 [Dec 7 2012]. Available from: http://www.gpo.gov/fdsys/pkg/FR-2012-12-07/pdf/2012-29184.pdf
Focus only on the first 33 pages for teh Risk adjustment system.
Summary:
This proposed regulations provides details on the risk adjustment formula that is proposed for the Federal and STate Health insurance exchanges. At its heart is an HCC model similar to the Medicare 100 condition HCC model. Innovations are that it has separate models for four metal levels (bronze, silver, gold, platinum), it uses a concurrent rather than prospective framework, it has separate models for infants, children and adults. It was estimated at RTI using Truven Health Analytics 2010 MarketScan® data, which we also have licensed at Boston University for research use. The rules are a painful 373 pages long. Focus on pages 1-33 for an overview of the RA approach.
Other NPRM (=Notice of Proposed Rule Making) for regulations of the ACA are the following.
EHB/AV (Essential Health Benefits/Actuarial Value) NPRM:
Summary: http://www.healthcare.gov/news/factsheets/2012/11/ehb11202012a.html
Citation: US National Archives and Records Administration. 2012. Code of Federal Regulations. Title 45. Patient Protection and Affordable Care Act; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation; Proposed Rule. [Available at: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0142-0001]

Discussion: The rule discusses accreditation of health plans in a federally-facilitated or state-federal partnership exchange. States that plans offered inside and outside of the exchange must offer a core package of benefits including the following: Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services, lab services, preventive and wellness services and chronic disease management, and pediatric services.

The rule also specifies options for each state’s “benchmark” plan. Plans must offer coverage greater than or equal to that offered by the benchmark plan.

The rule also specifies that HHS will provide an AV calculator to help issuers determine health plan ACs. The calculator uses a nationally representative sample. Starting in 2015, HHS will accept state-specific datasets to use with the calculator. The rule proposes a 2% AV window around the AV specified by for each metal group.

Market Reform NPRM:
Rule: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0141-0001
 

Citation: US National Archives and Records Administration. 2012. Code of Federal Regulations. Title 45. Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review; Proposed Rule. [Available at: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0141-0001]

Discussion: This rule focuses on reforms to the health insurance market. It includes guaranteed issue, premium regulation (rate bands, rate restrictions), single statewide risk pool, etc. The rule also proposes regulation changes to streamline data collection.

MPFS (Medicare Physician Fee Schedule) Rule:
Citation: US National Archives and Records Administration. 2012. Code of Federal Regulations. Title 42. Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of the Requirement for Termination of Non- Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013. [Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-11-16/pdf/2012-26900.pdf]
More rules and regulations are presented here.
I thank without implicating Tim Layton (BU RA extraordinaire) for organizing this information for me.

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