Home Column Bridging the Gaps for Consumer Operated and Oriented Plans

Bridging the Gaps for Consumer Operated and Oriented Plans

by Dustin Cortright
It was recognized early on by the policymakers behind the Affordable Care Act (ACA) that state-based health insurance exchanges could only be successful in their goal of providing a competitive marketplace for individuals and employers if the competition was plentiful enough within each state to offer a reasonable selection of choices to consumers. To buttress states lacking a sufficient number of insurers to rank as “competitive enough,” Congress created the Consumer Operated and Oriented Plan (CO-OP) program to galvanize competition, earmarking billions in federal loans as an incentive to act.

While the CO-OP program has indeed been successful in stimulating competition and expanding the menu of choices available to consumers in nearly two dozen states, the road has been rocky for CO-OPs since the exchange rollouts of 2013. From inexperience in the marketplace to difficulties raising capital, and cuts in limited funding; CO-OPS have been beset not only by challenges unique to their position but also by those that have universally plagued plans actively operating on the exchange.

With nearly all of the CO-OPs currently struggling to remain financially solvent, and even some doomsayers speculating a complete collapse of the program at large; the future of CO-OPs may very well hinge on meeting and overcoming these operational challenges.

A CO-OP Attitude Adjustment

To invigorate competition on the exchange, without unduly undermining existing plans, the ACA stipulated that CO-OPs be formed as member-governed, nonprofit health insurance issuers restricted to the issuance of insurance to individuals and the small group market. Despite the procurement of seed capital in the form of low-interest startup loans and the disbursement of large solvency loans to support struggling CO-OPs, the pecuniary disparity between premiums received and claims submitted since open enrollment has proven significant, forcing many CO-OPs into a ground-up re-evaluation of their approach to managing risks.

As new entrants into the health insurance arena, CO-OPs are faced with three pressing challenges as it relates to risk adjustment:

  1. Many CO-OPs are unaware of the significance of risk adjustment and some may lack the experience necessary to establish a practical risk adjustment model, a deficiency that severely handicaps a CO-OP’s ability to verify that risk adjustment activity is both accurate and complete. Furthermore, the fact that this competency generally exists amongst competing for commercial plans creates a severe competitive disadvantage.
  2. Many CO-OPs do not recognize the value in proactively engaging risk adjustment companies for risk adjustment services, unwittingly allowing errors and omissions in medical records to go unaddressed.
  3. Some CO-OPs have yet to procure a knowledgeable risk adjustment vendor for the mandatory, and quickly approaching, Initial Validation Audit (IVA) – an assessment that is required by each and every risk-adjusted participant on the exchange.

If CO-OPs are to surmount these obstacles, dynamic strides must be quickly taken to bridge these troubling gaps.

Consumer Operated and Oriented Plans

source: flickr.com

A Risky Business

In order for CO-OPs to “wether the red,” an accurate and comprehensive understanding of risk adjustment is not only a recommended course of action at this stage of the game, but crucial to ensure financial solvency and to retain a competitive edge. As with any complex process, an intelligent approach to risk adjustment requires the application of specialized knowledge and a strong grasp of best practices before implementation can begin. This reality makes it prudent that CO-OP leadership seek out the assistance of seasoned experts in the risk adjustment arena – specifically, organizations with the capacity to educate and, if need be, train provider personnel in proper coding techniques.

From understanding the Hierarchical Condition Category (HCC) model to comprehending risk calculations, how data flows between CO-OPs and the U.S. Department of Health and Human Services (HHS), and the intricacies of HHS’ timetables and payment schedules; a capable risk adjustment partner can quickly surpass the procurer-vendor relationship to become an active participant in a CO-OP’s success.

The Untallied Worth of Supplemental Adjustment

Amounting to nothing short of ensuring that plans are accurately compensated for the risks that they’ve shouldered, the benefits awaiting CO-OPs that opt to adopt a proactive approach to risk adjustment cannot be understated. Beyond providing education and training, a talented risk adjustment partner can assist CO-OPs in gauging the soundness of their HCC risk factor methodologies by retrieving medical records from practitioners and specialists and verifying that proper chart-based diagnostic practices have been performed. What’s more, a capable risk adjustment partner will ensure that accurate and complete reimbursement for a CO-OP is sought after and recovered by way of chronicling and highlighting any inaccuracies discovered during review.

One of the main differentiators between a typical risk adjustment vendor and a true partner is the strength of their analytics. Whereas any risk adjustment can tout the powerof their analytics, a true risk adjustment partner wields analytic tools developed from tried-and-true methods – a capacity to deliver that can only arise from an all-encompassing grasp of the industry’s workings and tenured experience.

Preparing for the IVA

All issuers of Qualified Health Plans (QHPs), and products off the exchange for both the individual and small group markets, are required by HHS to undergo an Initial Validation Audit and CO-OPs are no different. Although the schedule for these audits remains uncertain at the time of this writing, it’s only a matter of time before ACA plans are placed under the microscope. CO-OPs must, therefore, actively seek out a qualified risk adjustment auditor or face the consequences wrought by waiting too long, including losing out on the benefits derived from vetting the qualifications, costs, and preparedness of qualified vendors.

Furthermore; many risk adjustment companies are limiting the number of IVAs that they are willing to perform due to existing workloads, uncertain timetables, and the encroaching ICD-10 rollout. It is for this reason that CO-OPs are strongly encouraged to begin and complete the search for a risk adjustment vendor.

The Continuation of CO-OPs

It has yet to be determined whether the trials and tribulations currently experienced by CO-OPs are simply the growing pains of fledgling plans finding their sea legs in a new and uncertain marketplace or the ominous signs of a program in absolute peril. What is certain is that if CO-OPs are to survive and remain competitive, they must prioritize the integration of data-driven risk adjustment practices into their modus operandi with all due haste.

By partnering with a competent risk adjustment vendor, CO-OPs gain access to the sophisticated analytic tools they need not only to benefit from the empowerment that comes with acquiring practical knowledge, but to safeguard their underlying and noteworthy mission – providing a competitive, community-based healthcare alternative to employers and consumers alike.

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