Risk Adjustment on the Health Insurance Exchanges
In early 2014, DHHS introduced the concepts of Risk Adjustment for the Health Insurance Exchanges (HIX)
Despite the intervening months, there remain a large amount of confusion and some lingering questions regarding the details of this program.
Risk adjustment exists in the HIX sphere (also known as Commercial or HHC Risk Adjustment) for the same purposes that it was instituted into Medicare Advantage: to protect against adverse selection and mitigate the financial impact of healthy versus unhealthy members. Without the incentive of risk adjustment, health plans have traditionally selected healthier members, who cost them less.
Risk adjustment revenue levels this playing field: sicker members now represent greater investment but also greater reimbursement opportunity for the health plan.