Insight
London Market Monitor – 31 May 2022
Our May review of the markets and Solvency II discount rates.
The summer driving season is well into the rearview mirror, and the Affordable Care Act (ACA) External Data Gathering Environment (EDGE) server cycle is in full swing.1,2 Clearly, the time spent planning, coordinating, and carrying out your annual road trip is much more enjoyable, but neglecting these same critical activities with your data submissions can have far-reaching consequences for your organization.
Some seasoned travelers swear by a spontaneous itinerary, touting the freedom, flexibility, and excitement that comes with trekking into the unknown. When it comes to the EDGE server, this approach can be disastrous. Missing information, EDGE errors, and certain misspecifications will affect your risk adjustment transfers—either now or in a future audit by the Centers for Medicare and Medicaid Services (CMS). In the ACA market, these issues may create a double whammy of less favorable results for you and more favorable results for your competitors. In this short piece, we share best practices for a few key EDGE features to help keep your process on the right course and get the most out of your annual submission.
A successful cycle starts with a dedicated owner—someone who is engaged throughout the entire process and is responsible for thoughtful and thorough planning well in advance of the first submission deadline. CMS regularly provides information and updates via live webinars and the Registration for Technical Assistance Portal (REGTAP) website. The rules and regulations evolve over time, and your EDGE helmsman should map the entire route, with all major milestones and rest stops along the way. Priority should be placed on coordinating stakeholders and ensuring that key resources understand the timing of each leg. The graphic in Figure 1 lays out how a typical benefit year (BY) EDGE cycle might look.
The timeline spans quite a few months and leaves little downtime for assessing prior year improvement opportunities and laying the foundation for the next cycle. Planning ahead is critical to avoid multiple workstreams once the EDGE season begins and resources get tight. And starting early is even more important if you’re expecting a major process change (such as switching submission vendors or migrating to a new claim processing system).
Ideally, you’d stick to the itinerary as best you can, but even the most well-intentioned plan can get derailed by unexpected hazards. Some of these can be mitigated, if not avoided altogether. In the next section, we explore a few items you’ll encounter along the way and discuss strategies to help you stay engaged and react to changing conditions.
Below, we organize all sections in a similar structure to highlight why the concept is important and what issuers should know when navigating each.
Why it’s important: The server houses reference data that validates information on EDGE at various points in time. One important example is the Plan Data Table (PDT), which identifies benefit plan eligibility—defined by a Health Insurance and Oversight System (HIOS) plan ID—in a rating region within a specified timeframe. An incomplete PDT lowers the acceptance of valid members and their associated claims.
What you should know:
Why it’s important: The integrity of risk adjustment relies on the completeness and accuracy of issuer data, which is why EDGE rejects information failing certain checks.
What you should know:
Why it’s important: CMS regularly assesses EDGE data from the first to the last submission,5 and issuers failing any CMS check will receive a notification requiring action.
What you should know:
Why it’s important: Assuming you’re not accepting the risk adjustment default charge up-front, you need to provision and maintain an EDGE server. Whether hosting on premises or standing up a virtual AWS server, smart planning can save you costs and make the process more efficient.
What you should know:
Why it’s important: Diagnosis information on claims sent by providers does not always reflect the morbidity level and conditions of the member it’s supposed to represent.
What you should know:
Why it’s important: Given the extensiveness of just the “standard components” of the annual EDGE cycle, it can be easy to go on autopilot and let other points of interest pass on by. Every year, though, CMS deploys updates and enhancements that impact the risk adjustment program—some creating unexpected bumps in the road if you’re not paying attention.
What you should know: The following is the short list of items we suggest keeping on your radar.
The annual EDGE submission doesn’t have to be a stressful endeavor. A well-thought-out plan, proper and timely arrangements, and staying on course when the wheels seem like they’re about to fall off will go a long way in ensuring a successful cycle while reducing the worries and headaches.
Peter Fielek and Jason Petroske are actuaries for Milliman and members of the American Academy of Actuaries. They meet the qualification standards of the Academy to render the actuarial opinion contained herein. To the best of their knowledge and belief, this paper is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices.
The material in this paper represents the opinion of the authors and is not representative of the views of Milliman. As such, Milliman is not advocating for, or endorsing, any specific views contained in this paper related to the ACA risk adjustment program.
The information in this paper is designed to provide a framework for managing the External Data Gathering Environment (EDGE) server. This information may not be appropriate, and should not be used, for other purposes. We are not lawyers and, therefore, cannot provide legal advice. Confer with appropriate legal counsel or compliance areas before use of the information.
We do not intend this information to benefit any third party that receives this work product. Any third-party recipient of this paper that desires professional guidance should not rely upon Milliman’s work product but should engage qualified professionals for advice appropriate to its specific needs. Any releases of this paper to a third party should be in its entirety.
In preparing this analysis, we relied upon the following publicly available information from CMS:
We accepted this information without audit. If this information is inaccurate or incomplete, or at any time materially changes, conclusions drawn from it may also change. Differences between the theory discussed in this article and actual results depend on the extent to which future experience conforms to the assumptions made for this analysis. It is certain actual experience will not conform exactly to the assumptions used in this analysis for a variety of reasons, including changes to ACA risk adjustment regulations or guidance in future rulemaking or as a result of legislation or litigation. Insurers subject to the ACA risk adjustment program should monitor their results and take corrective action when necessary.
1 See footnote 3 in the Milliman white paper "ACA Risk Adjustment Management: Higher EDGE-ucation," available at https://www.milliman.com/en/insight/aca-risk-adjustment-management-higher-edge-ucation#3.
2 Millen, B.N. & Petroske, J.J. (December 2017). ACA Risk Adjustment Management: Going All-out Milliman White Paper. Retrieved December 22, 2021, from https://www.milliman.com/en/insight/aca-risk-adjustment-management-going-all-out.
3 CMS (August 2020). Health Insurance Oversight System Rate & Benefits Information System User Manual. Retrieved December 22, 2021, from https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/HIOS-RBIS-Manual.pdf.
4 REGTAP. Distributed Data Collection (DDC) for Risk Adjustment (RA) Including High-Cost Risk Pool (HCRP): EDGE Server Plan Data Overview. Retrieved December 22, 2021, from https://www.regtap.info/uploads/library/BY21_EDGEServerPlanData_091421_5CR_091421.pdf.
5 REGTAP. Distributed Data Collection (DDC) for Risk Adjustment (RA) Including High-Cost Risk Pool (HCRP): Quantity and Quality Data Evaluation Process. Retrieved December 22, 2021, from https://www.regtap.info/uploads/library/EDGE_Server_Quantity_Quality_101921_5CR_101921.pdf.
6 Fielek, P., Huth, E., & Petroske, J.J. (February 2021). Estimating ACA Risk Transfers: It’s a Tough Job, but Someone Has to Do It. Milliman White Paper. Retrieved December 22, 2021, from https://us.milliman.com/en/insight/estimating-aca-risk-transfers-its-a-tough-job-but-someone-has-to-do-it.
7 Mattie, L.L., Millen, B.N., Petroske, J.J., & Vandagriff, A. (December 2017). ACA Risk Adjustment Management: Cracking the Code. Milliman White Paper. Retrieved December 22, 2021, from https://www.milliman.com/en/insight/aca-risk-adjustment-management-cracking-the-code.
8 CMS. HHS-Developed Risk Adjustment Model Algorithm “Do It Yourself (DIY)” Software Instructions for the 2020 Benefit Year: April 15, 2021 Update. Retrieved December 22, 2021, from https://www.cms.gov/files/document/cy2020-diy-instructions04132021.pdf.
9 Gleed, C., Karcher, J., & Petroske, J. (February 2020). A Look Behind the Curtains. Milliman White Paper. Retrieved December 22, 2021, from https://www.milliman.com/-/media/milliman/pdfs/articles/a-look-behind-the-curtains.ashx.
10 The full text of the "Amendments to the HHS-Operated Risk Adjustment Data Validation (HHS-RADV) Under the Patient Protection and Affordable Care Act's HHS-Operated Risk Adjustment Program" rule is available at https://www.federalregister.gov/documents/2020/12/01/2020-26338/amendments-to-the-hhs-operated-risk-adjustment-data-validation-hhs-radv-under-the-patient-protection.
11 REGTAP. Distributed Data Collection (DDC) for Risk Adjustment (RA) Including High-Cost Risk Pool (HCRP): EDGE Server Announcements. Retrieved December 22, 2021, from https://www.regtap.info/uploads/library/DDC_SeriesX_ES_Announcements_072721_5CR_073021.pdf.
12 CMS intends to release full simulations of 2022 transfer results based on the proposed model enhancements. See https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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