What Happens to Risk Adjustment if the ACA is Repealed?

If the first month is any indication, 2017 poses significant changes for healthcare. With all the uncertainty, there’s one question that keeps surfacing—will risk adjustment go away if Congress repeals the Affordable Care Act (ACA)? The answer is no and here’s why – risk-based financial models extend far beyond those included in the ACA.

ACA is just a slice of the pie

Capitation and value-based reimbursement (based on the quality of care rather than quantity) use risk-adjustment models and have been components of Medicare Advantage since 1985. These approaches are also used extensively by managed Medicaid plans. While the ACA introduced a value-based reimbursement approach for an additional category of health plans, membership in ACA plans is small compared to Medicare Advantage and managed Medicaid. Currently, about one-third of all individuals eligible for Medicare are enrolled in a Medicare Advantage plan.

What about non-government funded health plans?

Commercial plans—those not funded by the government—are increasing their use of risk-based contracts with provider organizations to manage care for pre-determined populations of members. In other words, commercial plans that are not subject to ACA requirements also use risk-adjustment models.

The bottom line

  • Reimbursement approaches based on a set amount (typically “per member per month”) – adjusted for the risk of the population – are becoming more prevalent, not less prevalent, as a replacement for traditional fee-for-service (FFS) payment models.
  • The only way a value-based reimbursement model works effectively is with complete and accurate health status information for the population being covered.
  • The fundamental problem is that historic data used to gauge a population’s risk is often based on FFS claims where there is little to no incentive for providers to include comprehensive diagnosis information.
  • The need for an efficient and integrated approach to sharing member health status information between payers and providers has never been greater.