Time Value of Money in HHS-Operated Risk Adjustment Program
HHS also solicitated information on whether to take into account the time value of money for the risk adjustment transfers.[3] Specifically, they are thinking about where those with low claims cost are able to earn interest on premiums, that those who are incurring high claims cost would may not be able to earn.
Currently final risk adjustment transfer amounts are calculated around the midpoint of the year FOLLOWING the plan year, and payments are actually made closer to the end of the FOLLOWING year. For instance, for plan year 2023 the risk adjustment calculation was made in July of 2024, and actual transfers are not expected to be made until near the end of 2024. This could represent significant interest, especially considering current levels of interest compared to the recent low interest years.
CMS received comments and will take those under consideration although a discussion was not included in the final rule.
Pre-Exposure Prophylaxis (PrEP) in the HHS Risk Adjustment Adult and Child Models as an Affiliated Cost Factor (ACF)
A new type of factor was defined in the HHS risk adjustment models, known as an Affiliated Cost Factor (ACF),[4] which are NOT indicative of an active condition. This is unlike the HCCs and Prescription Drug Categories (RXCs) included in the HHS risk adjustment models which are directly related to diagnoses, and therefore represents a change in HHS’ approach. HHS also proposes the following “Principles” that would guide their decision making in developing any new ACF variable, which was finalized as proposed.
Principle 1— Must be clinically meaningful but are not indicative of a diagnosis for a specific serious medical condition. Therefore, this may refer to a preventive service or classes of treatments applicable to a wide variety of disease states.
Principle 2— Should be meaningfully predictive of total medical and drug expenditures, and no significant differences in the prices related to services or drugs included in the ACF.
Principle 3— Should have adequate samples sizes for estimates.
Principle 4— Should be able to discern the relationship between the disease severity and costs. Ie. the more severe the disease, the higher the costs.
Principle 5— Issuers should not be penalized for a provider prescribing additional NDCs or coding additional medical conditions (monotonicity).
Principle 6— Should be able to map a drug or service to the primary ACF.
Principle 7— Should not include ACFs that are particularly subject to prescribing variation or inappropriate prescribing.
[3] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 4. Solicitation of Comments—Time Value of Money in HHS-Operated Risk Adjustment Program
[4] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 2. HHS Risk Adjustment (§153.320) – c. Proposed Inclusion of Pre-Exposure Prophylaxis (PrEP) in the HHS Risk Adjustment Adult and Child Models as an Affiliated Cost Factor (ACF)