Gamification: The Realities of the Health Insurance Exchange Marketplace

I just returned from the fall Risk Adjustment Forum in Ft. Lauderdale with a greater appreciation of the perils of risk adjustment in the HIX marketplace in contrast with the Medicare Advantage world.  Then right on the heels of that, we noticed the headlines in Modern Healthcare that United HealthCare is having second thoughts about remaining in the HIX game due to $425M in losses.

Imagine that your HIX program invested a “chunk of change” in risk adjustment activities like you might under a Medicare Advantage plan.   With the MA plan, your CFO insists on a certain return on investment, and you have a high degree of confidence what that will be.  With the chart chases, in-home assessments, provider messaging and other initiatives, your MA recoveries have a predictable future. Not so with the HIX marketplace.

If matched by your HIX competitors, that same “chunk of change” dollar investment would still yield higher risk scores but the financial results would be zero.  If you just keep up with the competition, you will only ensure that you do not lose out on the zero sum risk adjustment game.  The only thing for certain is that, if you do not keep up with the other guys, you will lose.  And you might lose big time if they put the “pedal to the metal” (a HIX joke: bronze, silver, etc.).  

To quote RaeAnn Grossman from ArroHealth at the risk adjustment forum conference, the whole strategic situation is known as “gamification”.  This is a sophisticated approach to a strategizing how a local market will perform during the open enrollment season, given the competitors in the market and all the factors that impact risk selection (e.g., narrow networks, specific providers, plan designs, pricing, brand image, etc.).  Then the challenge is to leverage sophisticated approaches to risk adjustment based upon actuarial insights, advanced analytics and highly effective and efficient strategies and tactics. 

According to RaeAnn, if it were not for reinsurance, 61.9% of issuers would have lost money.  Those relying on risk corridors were paid out only 12.6 cents on the dollar.  Failures of so many co-op plans, for example, revealed the fragility and vulnerability of inexperienced plans.  Those issuers that are out to win and played their games effectively were the big winners in the virtual “Darwin” game constructed by HHS in this new world of HIX marketplace reality.

One thing is clear:  if you are not up to playing the game, your only hope is that neither are your competitors. Otherwise, lace up your shoe laces and get your game on.

Categories: HIX, risk adjustment
Tags: gamification, analytics

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