This notice is generally applicable to exchange plans but also impacts individual, small group, and large groups outside of the exchanges. This year, the proposed rule includes multiple updates to address concerns about the long-term stability of the exchange market. Specifically, the proposal responds to concerns about the accuracy in estimating risk for individual and small groups in the form of these recommended changes:

Partial year enrollment: HHS is looking to incorporate partial year enrollment duration factors. This would incrementally increase the risk score of an enrollee who is covered for less than a year.

Inclusion of prescription drug data: This update will increase the scores of enrollees who take certain medicines and would provide an additional source of information to indicate the disease and relative severity. In total, HHS added 12 prescription drug categories (RXCs) to the risk model and developed RXC- hierarchical condition category pairs. Some of the RXC categories include antivirals for hepatitis C, anti-diabetic agents (excluding insulin and metformin), and multiple sclerosis.

High-cost enrollees: Plans would be more accurately compensated for high-cost enrollees, which would otherwise cause plans to avoid enrolling the sickest patients.

Policy options to address healthier enrollees: HHS is also looking for ways to better predict risk for healthier sub-populations.

In addition to the risk adjustment recommendations, some of the other areas of focus in the proposal include: qualified health plan issuer participation standards, the creation of multiple age bands for children, and network adequacy.

Avalere will be hosting a webinar on this topic on Wednesday, September 21 at 1:00pm EST. The conversation will be led by Elizabeth Carpenter, Cara Kelly, and Tom Kornfield from our policy practice.