Risk-Adjustment Simulation: Plans May Have Incentives To Distort Mental Health And Substance Use Coverage.
Under the Affordable Care Act, the risk-adjustment program is designed to compensate health plans for enrolling people with poorer health status so that plans compete on cost and quality rather than the avoidance of high-cost individuals. This study examined health plan incentives to limit covered services for mental health and substance use disorders under the risk-adjustment system used in the health insurance Marketplaces. Through a simulation of the program on a population constructed to reflect Marketplace enrollees, we analyzed the cost consequences for plans enrolling people with mental health and substance use disorders. Our assessment points to systematic underpayment to plans for people with these diagnoses. We document how Marketplace risk adjustment does not remove incentives for plans to limit coverage for services associated with mental health and substance use disorders. Adding mental health and substance use diagnoses used in Medicare Part D risk adjustment is one potential policy step toward addressing this problem in the Marketplaces.
Ellen Montz (emontz@fas.harvard.edu) is a PhD candidate in the Department of Health Care Policy at Harvard University, in Cambridge, Massachusetts.
Ellen
E
Montz
Tim Layton is an assistant professor of health care policy in the Department of Health Care Policy at Harvard Medical School, in Boston, Massachusetts.
Tim
T
Layton
Alisa B. Busch is an assistant professor of psychiatry at McLean Hospital and Harvard Medical School, and an assistant professor of health care policy in the Department of Health Care Policy at Harvard Medical School.
Alisa B
AB
Busch
Randall P. Ellis is a professor in the Department of Economics at Boston University, in Massachusetts.
Randall P
RP
Ellis
Sherri Rose is an associate professor of health care policy (biostatistics) in the Department of Health Care Policy at Harvard Medical School.
Sherri
S
Rose
Thomas G. McGuire is a professor of health economics in the Department of Health Care Policy at Harvard Medical School, and a research associate at the National Bureau of Economic Research, in Cambridge.
Thomas G
TG
McGuire
D000328:Adult; D002908:Chronic Disease / Q000191:economics; D003198:Computer Simulation; D005260:Female; D062265:Health Insurance Exchanges / Q000191:economics; D006801:Humans; D019458:Insurance Coverage / Q000191:economics; D007348:Insurance, Health / Q000191:economics / Q000331:legislation & jurisprudence; D008297:Male; D001523:Mental Disorders / Q000191:economics*; D009042:Motivation; D058991:Patient Protection and Affordable Care Act / Q000191:economics; D020379:Risk Adjustment / Q000191:economics* / Q000331:legislation & jurisprudence; D019966:Substance-Related Disorders / Q000191:economics*; D014481:United States
Adverse Selection; Marketplace; Mental Health/Substance Abuse; Risk Adjustment