Evaluating Risk Adjustment and Medicare Advantage
Author
Heath Shackelford
Expert Panelists
Syed Mehmud, ASA, MAAA
Bruce Pyenson, FSA, MAAA
Al Bingham, FSA, MAAA, FCA
Geof Hileman, FSA, MAAA
Kevin Ruggeberg, FSA, MAAA
Jason Burk, FSA, MAAA
Rebecca Owen, FSA, MAAA, FCA
Douglas T. Norris, FSA, MAAA
Description
The use of Risk Adjustment in Medicare Advantage (MA) has come under scrutiny due in part to a higher rate of increase of costs of its participating Health plans relative to traditional Medicare despite statutory requirements that reimbursement for these two programs must be actuarially equivalent.
This brief provides background and perspectives on the use of risk adjustment in MA. The perspectives in this paper came from a group of actuaries with subject matter expertise in risk adjustment and Medicare Advantage. These perspectives include evaluations of the current MA risk adjustment methodology and function while also laying out some potential actions that can be taken to help resolve the reimbursement differences between the two Medicare programs.
Ultimately, Actuaries are deeply entrenched in understanding how financial models operating in the real world. Therefore, incorporating their perspective in helping to address these issues in Medicare Advantage is highly recommended to try to chart a path forward for the optimal use of Risk adjustment in this environment.
Report
Evaluating Risk Adjustment and Medicare Advantage Ideas for Improving an Important Tool
Acknowledgments
The Society of Actuaries Research Institute would like to thank the Project Oversight Group for their input and guidance during the project and on the report:
Douglas T. Norris, FSA, MAAA
Rebecca Owen, FSA, MAAA, FCA
Sara Teppema, FSA, MAAA, FCA
David Dillon, FSA, MAAA
Mitchell Momanyi, FSA, MAAA
Ian Duncan. FSA FIA FCIA MAAA FCA
Additional Resources
For further information and research on the topic of risk adjustment within Medicare
Advantage, please see the list of articles and research reports below:
Warren Calls for Expanding and Improving Medicare by Cracking Down on Corporate Profiteering Proceedings from Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth
Taking Stock of Medicare Advantage: Risk Adjustment Commonwealth Fund
Accuracy of Claims-Based Risk Scoring Models Society of Actuaries
Risk Scoring in Health Insurance: A Primer Society of Actuaries
Nontraditional Variables in Healthcare Risk Adjustment Society of Actuaries
Mortality Differences Between Traditional Medicare and Medicare Advantage: A Risk-Adjusted Assessment Using Claims Data National Center for Biotechnology Information
2023 Medicare Advantage and Part D Advance Notice Fact Sheet Centers for Medicare & Medicaid Services
Making The Right Diagnosis: A Response To Berwick And Gilfillan | Health Affairs
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