Risk Adjustment Data Validation (RADV)
Risk adjustment data validation is the process by which HHS verifies the quality and accuracy of the data used in the risk adjustment calculation.
HHS proposed revisions to their sampling procedure. Several proposals were included, which are quite detailed and technical, so we have not summarized, although all proposals appear to have been finalized as proposed.[6]
HHS also proposed to set a minimum materiality threshold for rerunning RADV results in the case of an appeal, which is resource and time intensive, to $10,000.[7] Currently, there is no specific rule as to when HHS would be required to rerun HHS-RADV in response to an appeal, although issuers may dispute if the amount exceeds 1% of the applicable payment or charge from the issuer for the benefit year OR $10,000, whichever is less. This was finalized as proposed, beginning with the 2023 benefit year. HHS recognized this would not prohibit recalculation and reissuance of HHS–RADV results for a given benefit year, as a result of an identified HHS methodological error.
Other Updates
The 2020-2022 benefit year enrollee-level EDGE data was proposed to recalibrate the HHS risk adjustment.[8] This was finalized as proposed. CMS noted that while they acknowledge possible impacts from the COVID-19 public health emergency, they did not identify notable anomalous trends that would impact predictiveness.
A discussion was included in the final rule regarding adding an RXC to the HHS risk adjustment adult models for Tepezza, which treats thyroid eye disease, or to add a payment HCC for Graves Disease/Hyperthyroidism. CMS has concerns about adding Tepezza due to thyroid eye disease not being categorized as a payment HCC and intends to research further, as well as to consider adding a payment HCC for Graves Disease/Hyperthyroidism.
The proposed 2026 benefit year HHS risk adjustment model factors were published in Tables 4 through 9.[9] The calculation for the final coefficients were unable to be completed to publish in the final rule due to proposals related to the PrEP ACF, therefore these will be published by Spring of 2025.
The R-square statistics for 2026 model were published in Table 10 of the proposed rule, however, .[10] Commenters in the final rule acknowledged decreases in the R-squarer statistics in 2022 compared to prior years. CMS noted they believe this is related to more high cost enrollees in recent data years, and do not recognize data errors at this time.
Autism spectrum disorder, ESRD, and maternal and newborn care were brought up as conditions that commenters believe are undercompensated, which CMS will under consideration in future benefit years.
No changes were proposed to the CSR adjustment factors.[11] While no changes were proposed, the final rule included a discussion on potentially increasing the 1.12 CSR adjustment factor for the Massachusetts wrap-around plans with AVs above 94% to those used in Arkansas Medicaid Expansion plans.
No changes were proposed to the risk adjustment transfer formula proposal, or the high-cost risk pool parameters (maintain the $1 million threshold and 60 percent coinsurance rate).[12]
Risk adjustment fee was proposed to not change from 2025, at $0.18 PMPM, however, it was increased to $0.20 PMPM in the final rule.[13] The increase is due to the assumption that the enhanced PTC will expire at the end of 2025, resulting in lower enrollment while the expected cost to operate the program is not expected to change.
[6] 6. Risk Adjustment Data Validation Requirements When HHS Operates Risk Adjustment (HHS–RADV) (§§153.350 and 153.630) 6. Risk Adjustment Data Validation Requirements When HHS Operates Risk Adjustment (HHS–RADV) (§§153.350 and 153.630)
[7] 6. Risk Adjustment Data Validation Requirements When HHS Operates Risk Adjustment (HHS–RADV) (§§153.350 and 153.630) 6. Risk Adjustment Data Validation Requirements When HHS Operates Risk Adjustment (HHS–RADV) (§§153.350 and 153.630) b. c. HHS–RADV Materiality Threshold for Rerunning HHS–RADV Results (§156.1220(a)(2)) and C. Part 155—Exchange Establishment Standards and Other Related Standards – 10. HHS–RADV Materiality Threshold for Rerunning HHS–RADV Results (§156.1220(a)(2))
[8] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 2. HHS Risk Adjustment (§153.320) – a. Data for HHS Risk Adjustment Model Recalibration for the 2026 Benefit Year
[9] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 2. HHS Risk Adjustment (§153.320) – d. Proposed List of Factors To Be Employed in the HHS Risk Adjustment Models (§153.320)
[10] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 2. HHS Risk Adjustment (§153.320) – f. Model Performance Statistics
[11] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 2. HHS Risk Adjustment (§153.320) – e. Cost-Sharing Reduction Adjustments
[12] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 3. Overview of the HHS Risk Adjustment Methodology: State Payment Transfer Formula
[13] B. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment – 5. HHS Risk Adjustment User Fee for the 2026 Benefit Year (§153.610(f))