Q&A—Issue Brief Looks at Risk Assessment, Adjustment viz. Health Equity

UccelloThe Health Equity Committee released an issue brief, Health Risk Assessment and Risk Adjustment in the Context of Health Equity, which describes the different uses of risk assessment and risk adjustment, and lays out issues to consider ensuring that these tools advance health equity.

“The increased focus on health equity has led to a reexamination of risk assessment and risk adjustment tools, with a specific focus on whether and how to incorporate social risk factors,” the issue brief states. “Risk assessment and risk adjustment models need to be developed specifically for the purpose they are being used.

“Otherwise, they could misallocate resources or predict an outcome other than the variable of interest. However, if not used appropriately, risk adjustment can also exacerbate disparities and worsen affordability and lead to worse outcomes,” it says.

HealthCheck did a Q&A with Academy Senior Health Fellow Cori Uccello, primary author of the issue brief.

What are the different uses of risk assessment and risk adjustment and why are they so important?

Health risk assessment and risk adjustment are used in several ways in the health insurance and health care systems. Risk adjustment is used to adjust premium payments to health insurance plans based on the relative financial risks of their enrollee populations. In this instance, risk adjustment helps ensure that plans are not under- or over-paid relative to the health of their enrollees, which is especially important when insurers are not allowed to vary premiums by health status. Otherwise, insurers could benefit by avoiding enrolling people with high expected health costs. Risk adjustment is also used in programs that reward or penalize health care providers based on health care outcomes so they are not unfairly rewarded or penalized for factors outside of their control. Risk assessment is used to quantify the relative risk of an individual or group and can be used as an input to risk adjustment and to identify individuals for targeted interventions, such as care management.

Are social determinants of health the same as social risk factors? If not, how do they differ?

The language around health equity issues has been evolving. Social determinants of health are usually understood to mean the conditions in which people live, work, learn, and play and nonmedical factors such as employment, income, housing, education, transportation, child care, and discrimination; these factors can be either positive or negative drivers of health. In our paper, the term social risks is used to refer to factors at the individual level that can affect health negatively (e.g., socioeconomic position, race/ethnicity). This is a reframing of the term socioeconomic status.

Related, the issue brief states that data are limited on social risk factors. Are plans / insurers collecting more of these data now, and if so, how might health equity benefit?

In the past, there were regulatory concerns about insurers collecting data on social risk factors because it was feared the data would be used to discriminate against people with higher risks. Now, however, there is a growing recognition of the need to collect data on social risk factors in order to monitor health disparities and to allow for better targeting of care and services to individuals with greater needs. As the Health Equity Committee will explore in a forthcoming paper, collecting standardized data on social risks from all payers would facilitate more robust analyses on health care disparities. In addition, more granular data categories can help address important differences between populations and subpopulations.

Can you give an example of how a group that has been economically or socially marginalized might have health care needs that aren’t reflected in risk adjustment models? How does such a scenario perpetuate health inequities?

Consider the example in which a community is not serviced by public transportation. People living in this community may have less ability to get to a health care provider especially if the provider network does not include providers close by. These barriers to care can reduce their utilization of health care services and their recorded diagnoses. As a result, their risk scores and therefore the risk adjusted payments to health plans could be low relative to their health care needs. This example illustrates the potential problems of using historical experience—past underutilization can be embedded in future projections.

What can actuaries do to assure that health risk assessment and risk adjustment models don’t exacerbate health disparities?

Actuaries can be intentional in their use of data, models, and algorithms. As experts in data and modeling, actuaries can take the lead in examining the historical data they use to better understand whether there are any inherent biases and if so, to make any necessary adjustments. Models and algorithms can also be tested for bias to determine whether they unfairly disadvantage populations with greater social risks. Actuaries can consider how to revise models so that they improve health equity. And they can join the Health Equity Committee to further explore these topics and contribute to the actuarial profession’s input on health equity issues.

Barb Klever Nominated to be Vice President, Health

KleverThe Academy’s Nominating Committee reported on the slate of three incoming vice presidents, including Barb Klever, to be vice president, health. Klever, who has served as a regular director on the Academy Board since 2019, has served on a variety of Health Practice Council (HPC) positions, including chairperson of the Individual and Small Group Markets Committee.

Member-Selected Directors

Two HPC volunteers were among three people elected in August to be member-selected directors on the Academy Board of Directors, with terms commencing at the Academy’s Envision Tomorrow: 2022 Annual Meeting” in November. Member-selected directors serve three-year terms.

Lerche
BohlThey are:

• Joyce Bohl, chairperson of the Individual and Small Group Markets Committee, and a member of the Active Benefits Subcommittee.
• Julia Lerche, chairperson of the HPC’s Medicaid Committee. Also a member of the Health Equity Committee and a past member of several HPC work groups, Lerche was profiled in an Actuary Voices podcast earlier this year.

For more information, visit the Board Election Center.

HPC Presents Virtually to NAIC

Health Practice Council (HPC) volunteers presented virtually to the National Association of Insurance Commissioners (NAIC) prior to NAIC’s Summer National Meeting in Portland, Ore., in August. The HPC presented to NAIC’s Health Actuarial (B) Task Force with a report on Group Life Waiver of Premium Valuation Table (joint with the Society of Actuaries), along with HPC and professionalism presentations. As a follow-up, Health Equity Committee Chairperson Annette James presented on equity considerations for barriers to care and health plan benefit design to NAIC’s Special (EX) Committee on Race & Insurance.

Issue Brief Looks at 2023 Health Insurance Premium Drivers

The Individual and Small Group Markets Committee released an issue brief analyzing the drivers of changes in health insurance premiums in the individual and small group markets for 2023. The Academy also released an accompanying infographic illustrating factors underlying premium rate-setting and highlighting major components driving changes for 2023.

“Proposed health insurance premium rates reflect many factors, which can include the effects of legislative and regulatory changes,” said Academy Senior Health Fellow Cori Uccello. Read the Academy news release.

Virtual Briefing

Following release of the issue brief, the Academy hosted a virtual briefing for congressional staff and Academy membership on drivers of 2023 individual and small group health insurance premiums.

HPC Vice Chairperson Barb Klever—along with committee member Juan Herrera and Chairperson Joyce Bohl, who moderated—examined rate-setting factors and discussed the major drivers of why 2023 premiums could differ from 2022.

Factors examined included COVID-19, the potential expiration of American Rescue Plan Act subsidies, resumption of Medicaid redeterminations after the public health emergency ends, and the effects of inflation on health care costs. Slides and audio are available via the online webinar archive as a free benefit to Academy members.

Academy Discusses DE&I at Drake Symposium

James presents at the symposium

Academy Board member and Health Equity Committee Chairperson Annette James presented at the Drake Symposium on Insurance on “Diversity, Equity & Inclusion in the Actuarial Profession.”

James connected with about 150 students and shared insights on what DE&I is, the importance of diversity in the U.S. actuarial profession and the Academy, and how DE&I is a strategic focus of the Academy. The Academy sponsored five students to attend the symposium, as part of a diversity-scholarship initiative.

James provided a deep dive into a major area of the Academy’s public policy efforts with a detailed discussion of the committee’s ongoing work in defining and addressing health equity actuarial issues, and considerations in incorporating health equity into health work and avoiding unintended consequences.

Issue Brief Examines Medicare Trustees Report

The Medicare Committee’s issue brief on the annual Medicare Trustees Report examined the program’s key challenges. The report shows that the Medicare Hospital Insurance (HI) Trust Fund will have sufficient funds to cover its obligations until 2028— two years later than reported last year.

Academy Senior Health Fellow Cori Uccello was the keynote speaker at the Bipartisan Policy Center’s June 7 webinar on the report, offering background on the program’s finances and noting the challenges in the HI and Supplementary Medical Insurance (SMI) trust funds.

“In addition, we need to think about whether and how the program affects racial and ethnic disparities,” Uccello said. “The Medicare program has a great opportunity here to be a leader in addressing health equity.”

‘What the Health?’—Uccello also discussed the Trustees Report on the popular “What the Health?” weekly podcast, hosted by Kaiser Health News’ Julie Rovner.

‘Essential Elements’ updated—The Academy also updated the related Essential Elements paper, “Medicare’s Long-Term Sustainability Challenge.”

Capitol Forum Webinar Examines Trustees’ Reports

The Academy hosted a Capitol Forum webinar that offered examined the annual Medicare and Social Security trustees’ reports, which were summarized in an Academy alert.

Social Security Administration Chief Actuary Stephen Goss and Deputy Chief Actuary Karen Glenn, along with Paul Spitalnic, chief actuary of the Centers for Medicare & Medicaid Services (CMS), offered insight into their assumptions and how recent events like the pandemic and related economic downturn were reflected in their projections.

Rina Vertes and Amy Kemp, respective chairpersons of the Academy’s Medicare and Social Security committees, facilitated the discussion. Slides and audio are available in the online webinar archive, a free benefit for Academy members.

Webinar Looks at LTC Insurance

The Academy hosted a webinar examining the Long-Term Care (LTC) Actuarial Equivalence Work Group’s public policy issue brief, Value of Reduced Benefit Options in Long-Term Care Insurance Rate Increases. Presenters looked at actuarial equivalence for LTC insurance rate increases, whether a new inflation rate is reasonable, reduced benefit options in lieu of a rate increase, and took questions from attendees. Slides and audio are available in the online webinar archive, a free benefit for Academy members.

Webinar Looks at Health Spending in Wake of COVID-19

The Academy hosted “Health Spending Projections in the Wake of COVID-19,” a webinar that featured presentations by COVID-19 subject-matter experts, including John Poisal, deputy director, National Health Statistics Group, Office of the Actuary, CMS; and Regina Rosace, vice president medical director with SCOR Global Life Sciences.

Presenters offered information on how the pandemic has affected national health spending and is projected to affect near-term spending, including an overview of newly released CMS national health expenditure projections. Slides and audio are available free to logged-in Academy members.

CCIIO Officials Present at Webinar on 2023 NBPP

The Academy hosted “CCIIO Overview of the HHS Notice of Benefit and Payment Parameters for 2023 Final Rule & Associated Materials,” a health webinar that featured officials from CMS’ Center for Consumer Information and Insurance Oversight (CCIIO).

Presenters covered the recently released final 2023 Notice of Benefit and Payment Parameters (NBPP) and other materials including the actuarial value (AV) calculator, letter to issuers, and Quality Rating Informational Bulletin, and took questions from attendees.

A webinar recording is available free to logged-in Academy members.

Committee Releases Issue Brief on Medicaid & Managed Care

The Medicaid Committee released an issue brief, Medicaid Managed Care State-Directed Payments—A Primer, which discusses how these payments have evolved from supplemental and pass-through payments; recent changes to federal guidance governing them; and recommendations from the Medicaid and CHIP Payment and Access Commission (MACPAC).

HPC Comments to NAIC, Federal Agencies

Health Practice Council (HPC) committees and work groups commented to the National Association of Insurance Commissioners (NAIC) and governmental agencies, including CMS.

• The Health Equity Committee sent comments responding to CMS’ request for information on the Medicare Advantage program.
• The Group Life Waiver Premium Valuation Table Work Group submitted proposed 2022 Group Life Waiver Tables and Adjustment Factors to the NAIC’s Health Actuarial (B) Task Force (HATF).
• The Group Life Waiver Premium Valuation Table Work Group submitted recommendations jointly with the Society of Actuaries’ Research Institute (SOARI) to HATF on the revised 2022 Group Life Waiver of Premium Valuation Table and the revised Actuarial Guideline XLIV (AG 44).
• The Health Solvency subcommittee submitted an H2 underwriting letter to NAIC’s Health Risk-Based Capital (E) Working Group.
• The Health Equity Committee sent comments responding to CMS’ request for information (RFI) on the Medicare Advantage program. The committee focused on the health equity aspects of the questions posed within the RFI.
• The Individual and Small Group Markets Committee and its Active Benefits Subcommittee sent comments to the IRS on the proposed rule, “Affordability of Employer Coverage for Family Members of Employees.”
• The Individual and Small Group Markets Committee and its Risk Sharing Subcommittee submitted a letter to CCIIO on cost-sharing reduction premium load factors.
• The LTC Valuation Work Group gave a follow-up presentation also jointly with SOARI, to NAIC’s Long-term Care Actuarial (B) Working Group to discuss the data set used in preparation of the Long-Term Care Insurance Mortality and Lapse Study.

Webinar Examines Hospital Price Transparency and Variation

The Academy hosted a health webinar, “Hospital Prices: Can Greater Price Transparency Drive Lower Prices and Reduce Price Variation?” Presenters were Michael Cohen, a Congressional Budget Office analyst; Krutika Amin, an associate director for the Kaiser Family Foundation focusing on the Affordable Care Act; and Andrea Rome, a member of the Academy’s Health Care Delivery Committee, which produced the issue brief, Implications of Hospital Price Transparency on Hospital Prices and Price Variation. Committee Chairperson Rebecca Owen moderated.

In addition to the issue brief, presenters discussed price variations and the role of insurers, the evolution of price transparency, and the potential impact of price transparency on utilization and costs, and they took questions from attendees for the second half of the webinar. Slides and audio are available free for Academy members.