population risk scores and plan design
TRANSCRIPT
Population Risk Scores and Plan Design
RISE California SummitJuly 20, 2015
Richard Lieberman
Chief Data Scientist (aka “Mad Scientist”)
Today’s Agenda
• I will discuss product design in the context of:
• Transitional policy
• Small-group vs. individual market demand
• The role of the shared responsibility payment
• What kind of people enrolled in Marketplace coverage in 2014
• Where to focus product design efforts
Overarching Theme
• The people who have enrolled in small-group and individual insurance products are only a fraction of those who will ultimately enroll in the years ahead
• It is too early to draw definitive conclusions about the risk profile of members
• Product design will need to remain fluid
We Know the ACA is Increasing Coverage Access
ACA Creates Winners and Losers
• It is impossible to move from a system in which people with preexisting conditions can be denied health coverage or charged much higher premiums to a system where people pay the same premium regardless of their health without some who have previously benefited having to pay more
• Some of the winners might perceive themselves as losers
• Prior reforms of the US health care system typically created only winners
• Medicare beneficiaries are uniformly better off than they would be without coverage
What Happens When Politics Drives Public Policy!
Is Transitional Policy a Little Train Wreck?
• The Administration gave states the option of letting insurers continue individual and small group plans that would otherwise have been cancelled in 2014, because they did not comply with ACA standards, until October 1, 2017
• Thirty-five states are allowing issuers to continue transitional plans for one or more years
• 21 states are allowing issuers extend these plans through 2017
Or a Big Train Wreck?
• “Millions of small businesses nationwide — and an estimated 70% of California's small firms that offer employee health insurance — haven't yet faced all the sweeping changes that resulted from the ACA”
• Colorado has about 190,000 people in transitional plans- 75,000 with individual coverage and about 115,000 people in small group plans
• There are only 140,327 enrolled in individual market plans
Sources: http://www.latimes.com/business/la-fi-healthcare-watch-20150413-story.html and http://www.lifehealthpro.com/2015/03/13/colorado-firm-on-ppaca-compliance
Individual Mandate Penalties Increase Over Time….
Mandate Penalties Are Still A Suggestion!
27-Year Old Individual
Percent of Federal Poverty Level
2015 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $325 $469 $704 $938 $1,173
Lowest Cost Subsidized Bronze Annual Premium $0 $860 $2,162 $2,162 $2,162
Difference ($325) $391 $1,458 $1,224 $989
Percent of Federal Poverty Level
2016 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $695 $695 $875 $1,167 $1,459
Lowest Cost Subsidized Bronze Annual Premium $0 $946 $2,378 $2,378 $2,378
Difference ($695) ($1,641) $1,503 $1,211 $919
Source of 2015 Results: “Individual Mandate Penalty May be Too Low to Attract Middle-Income Individuals to Enroll in Exchanges” Avalere Health, April 24, 2015 (www.avalere.com)
Even for Older People…Penalties Are Minimal
50-Year Old Individual
Percent of Federal Poverty Level
2015 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $325 $469 $704 $938 $1,173
Lowest Cost Subsidized Bronze Annual Premium $0 $424 $2,291 $3,407 $3,684
Difference ($325) ($45) $1,587 $2,469 $2,511
Percent of Federal Poverty Level
2016 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $695 $695 $875 $1,167 $1,459
Lowest Cost Subsidized Bronze Annual Premium $0 $466 $2,520 $3,748 $4,052
Difference ($695) ($1,161) $1,645 $2,581 $2,594
Source of 2015 Results: “Individual Mandate Penalty May be Too Low to Attract Middle-Income Individuals to Enroll in Exchanges” Avalere Health, April 24, 2015 (www.avalere.com)
Are Sicker-than-Average People Enrolling?
• Researchers used Express Scripts data to compare 1 million Marketplace enrollees to a comparison group of members with employer-sponsored insurance (ESI)
• There were marked differences in age and medication use between early Marketplace enrollees versus those who enrolled later
• Marketplace enrollees had both lower overall drug spending and medication use than did the comparison group with employer sponsored coverage and lower use of most of the medication classes
• Marketplace enrollees had nearly four times higher odds of using HIV medications than the comparison group. Out-of-pocket expenses for specialty medicines were 36 percent higher among Marketplace enrollees than in the comparison group as well
Monthly Prescriptions Filled, By Month Of Enrollment In The Marketplace And The Employer-Sponsored
Comparison Group, 2014
Julie M. Donohue et al. Health Aff 2015;34:1049-1056
©2015 by Project HOPE - The People-to-People Health Foundation, Inc.
Odds Ratios Of Any Use Of Specific Therapeutic Categories Among Marketplace Enrollees Versus The
Comparison Group, January–September 2014
Julie M. Donohue et al. Health Aff 2015;34:1049-1056
©2015 by Project HOPE - The People-to-People Health Foundation, Inc.
Future Impacts on Product Design
• Most of the “action” has been in the individual and Medicaid expansion markets
• Despite this, there are still millions of potential new members for issuers to enroll
• But the real impacts on product design will be in the small group market– once transitional policy plans non-renew
• With the phase-out of the reinsurance program (50% coinsurance in 2015 and a $90,000 attachment point in 2016), issuers will need to very aggressively manage higher risk members
• It is likely that many of the remaining members eligible for individual coverage will exhibit lower than average risk
Mile High Healthcare Analytics Can Assist You...
• Please learn about our new Risk Adjustment Advisory Service!
• Strategic consulting and business process assessments of risk adjustment operations or quality measurement operations
• Operational and clinical education around risk adjustment and quality improvement
• Data analytics and predictive modeling, focusing on provider behavior and clinical outcomes
• We design, transform, and load data into data warehouses
• Redesign of the HRA process and oversight of the process
Next Webinar
• Mile High Healthcare Analytics will continue our free webinar series. We will continue to present key risk adjustment and performance improvement topics to health plans and provider groups.
• Then, we will meet again on July 22nd to discuss “Clear Sailing After King: the Individual and Small-Group Markets?”
• Register at: http://www.healthcareanalytics.expert/news-and-events/free-webinar-series/
CONTACT INFORMATION
Richard Lieberman
720-446-7785 (voice)
www.healthcareanalytics.expert
THANK YOU FOR JOINING ME!!
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