Allowing Insurers to Withhold Data on Enrollees’ Health Status Could Undermine Key Part of Health Reform
Data Collection Needed to Ensure Insurer Accountability and Reduce Risk of Error and Fraud
End Notes
[1] HHS will administer risk adjustment in states that do not elect to operate their own exchange or in states that elect to establish a state-based exchange but opt not to administer risk adjustment in their state.
[2] See the preamble to HHS’s proposed risk adjustment regulations at 76 Fed. Reg. 41930 (July 15, 2011).
[3] See, for example, Aetna, “Proposed Rule Related to Reinsurance, Risk Corridors and Risk Adjustment,” October 31, 2011; America’s Health Insurance Plans, “Proposed Rule — Standards Related to Reinsurance, Risk Corridors and Risk Adjustment (CMS-9975-P) — AHIP Comments,” October 31, 2011; and Blue Cross and Blue Shield Association, “Proposed Rules for Standards Related to Reinsurance, Risk Corridors and Risk Adjustment (CMS-9975-P),” October 31, 2011, available at regulations.gov. The Blue Cross and Blue Shield Association supports a variant of the distributed approach under which the state risk adjustment entity or HHS would request, through a web-based interface that insurers conduct certain calculations based on insurers’ claims and encounter data, including risk score calculations. But the risk adjustment entity would lack direct access to the underlying data under this variant, as under the basic distributed approach.
[4] See Representative Tim Huelskamp, “Obamacare HHS rule would give government everybody’s health records,” September 23, 2011, http://washingtonexaminer.com/opinion/op-eds/2011/09/obamare-hhs-rule-would-give-government-everybody-s-health-records and Representative Denny Rehberg, “Chairman Rehberg Investigates Possible Violations of Private Health Care Information Under President Obama’s Health Care Plan,” October 13, 2011, http://pressrehberg.congressnewsletter.net/mail/util.cfm?gpiv=2100078808.1461.269&gen=1. Representative Larry Bucshon (R-IN) has also introduced legislation (H.R. 3218) barring HHS from accessing data in individually identifiable form for purposes of risk adjustment.
[5] The insurers supporting the distributed model cite several examples of systems they believe successfully use a distributed data approach, but notably, none of them are risk adjustment systems. They point to systems for FDA medical product safety surveillance, medical research, vaccine safety, and provider quality measurement. In fact, even in the case of the FDA medical product safety surveillance system (currently under development), the FDA recently indicated that a distributed model may be insufficient in some cases and direct access to some data may be required. Food and Drug Administration, “Report to Congress: The Sentinel Initiative — A National Strategy for Monitoring Medical Product Safety,” August 19, 2011.
[6] See Congressional Budget Office, “Designing a Premium Support System for Medicare,” December 2006; Centers for Medicare and Medicaid Services, “Medicare Advantage Risk Adjustment Data Validation CMS-HCC Pilot Study: Report to Medicare Advantage Organizations,” July 24, 2004; Centers for Medicare and Medicaid Services, “Announcement of Calendar Year 2008 Medicare Advantage Capitation Rates and Payment Policies,” April 2, 2007; Centers for Medicare and Medicaid Services, “Advance Notice of Methodological Changes for Calendar Year 2009 for Medicare Advantage Capitation Rates and Part D Payment Policies,” February 22, 2008; Centers for Medicare and Medicaid Services, “Advance Notice of Methodological Changes for Calendar Year (CY) 2010 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies,” February 20, 2009.
[7] January Angeles and Edwin Park, “Upcoding Problem Exacerbates Overpayments to Medicare Advantage Plans,” Center on Budget and Policy Priorities, revised September 14, 2009.
[8] CMS was required by the Deficit Reduction Act of 2005 to modify the Medicare Advantage risk adjustment system to adjust for upcoding for plan years 2008-2010. Despite this statutory requirement, the Bush Administration did not address the issue due to strong opposition from the insurance industry. The Obama Administration, however, began to account for upcoding starting in the 2010 plan year. In addition, under the ACA, CMS is required to adjust for upcoding on an ongoing basis.
[9] American Academy of Actuaries, “Proposed rule on standards related to reinsurance, risk corridors, and risk adjustment,” October 28, 2011, available at regulations.gov.
[10] See, for example, Paul Van de Water, “Converting Medicare to Premium Support Would Likely Lead to Two-Tier Health Care System,” Center on Budget and Policy Priorities, September 26, 2011.
[11] Kaiser Permanente, “Proposed rule: Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment, File Code CMS-9975-P,” October 31, 2011 and Alliance for Community Health Plans, “Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment (CMS-9975-P),” October 20, 2011, available at regulations.gov.
[12] Section 1312(c) of the Affordable Care Act.
[13] Section 1311(c)(1)(A) of the Affordable Care Act.
[14] See, for example, American Cancer Society Cancer Action Network, American Heart Association, Center on Budget and Policy Priorities, Georgetown University Center for Children and Families, and Timothy Jost, “File Code CMS-9975-P (Patient Protection and Affordable Care Act; Standards Related to Reinsurance, Risk Corridors and Risk Adjustment),” October 21, 2011 (not yet available at regulations.gov) and Consumers Union, “CMS-9975-P Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment,” October 28, 2011, available at regulations.gov.
[15] A hash algorithm takes a set of data and condenses it into a representation comprised of alphanumeric characters but does not modify the original data.
[16] One leading consumer privacy group has also recommended that in contrast to the distributed approach, insurers be allowed to physically retain claims and encounter data but place them on dedicated “edge” servers that are fully accessible to state entities administering risk adjustment or HHS. The intent is to ensure accountability for plans and the accuracy of the underlying data while lessening the risk and severity of data breaches. This approach would have to be carefully evaluated to determine whether it would actually allow states or HHS to perform all needed functions such as ensuring that the claims and encounter data placed on the server are reliable and valid, identifying errors and upcoding on a timely basis, having a clear audit trail (i.e., ensuring that the original data placed on the edge server controlled by the insurer have not been subsequently modified), and enforcing other key exchange and market reform provisions under the Affordable Care Act. Center for Democracy and Technology, “CDT Comments to CMS-9975-P,” October 31, 2011, available at regulations.gov.