Individuals who enrolled in federal health insurance exchange coverage during special-enrollment periods in 2014 and 2015 had higher health costs than those who enrolled during the standard open enrollment even though they had lower risk scores, according to an Avalere Health analysis published Wednesday.
People who enrolled during special-enrollment periods in 2015 cost 4.6% more per member per month than those who didn't, but the risk scores of special-enrollment period enrollees were 20% lower on average than those choosing a health plan during open enrollment, Washington-based consultant Avalere found.
One reason: “There are a range of costs that are not being included in the risk score,” such as the expensive prescription drugs individuals are taking, said Dan Mendelson, president of Avalere. That means the health plan bears the cost for part-year patients who enroll in a plan to get access to a pharmaceutical drug, he said.
Risk scores are a measure of predicted healthcare costs assigned to insurers as part of the healthcare law's permanent risk-adjustment program. The program is intended to compensate health plans for taking on sicker enrollees who have higher healthcare costs, thereby attempting to eliminate the incentive to enroll only healthier people. The scores are calculated using a person's demographic and health status information. A higher risk score means that a person is sicker or has complicated chronic health conditions, which leads to a higher payment under the risk-adjustment program.
Special-enrollment periods allow people to enroll in health coverage outside of the yearly open enrollment if they have some kind of major life event, such as having a child, moving or getting married. Insurers have argued that lax special-enrollment rules allow people to game the system by hopping on and off exchange coverage based on their health status. Aetna, which funded the Avalere study, is one of many large insurers who have pressured the Obama administration to make changes to the special-enrollment periods.
According to the analysis, in 2015 open enrollment enrollees averaged $389 per-member per-month healthcare costs, while special-enrollment period enrollees averaged $407 per member per month. At the same time, people who enrolled during open enrollment in 2015 had an average risk score of 1.4, while risk scores for those who chose a health plan during special-enrollment periods had an average risk score of 1.12.
In 2014, enrollees followed a similar trend. During that year, those who enrolled in health plans during the open enrollment on average cost $391 per member per month, while special-enrollment period enrollees cost $454 per member per month on average. The average risk score for open enrollment enrollees was 1.36, compared with 1.12 for special-enrollment period enrollees, Avalere said in the analysis.
About 944,000 people enrolled in coverage during a special-enrollment period between Feb. 23 and June 30, 2015, according to the CMS. On average, 2015 special-enrollment enrollees stayed in their plan for 3.6 months, while those who enrolled during open enrollment stayed in the plan for 7.8 months on average, Avalere said.
The CMS has made steps to address concerns over the special-enrollment periods. The agency issued an interim final rule in August this year that narrowed the circumstances in which someone could enroll through a special-enrollment period. The new rule also said people must show proof of qualification, but some health plan critics argued the rule isn't enough to curb abuse.
Additionally, in August the CMS proposed rules that would refine the risk-adjustment program to factor in prescription drug data in addition to the illnesses that are already factored into someone's risk score.
“Fully accounting for the cost of pharmaceuticals is an important first step,” Mendelson said. “It shouldn't be more or less profitable to enroll special-enrollment groups.”
Previous studies have similarly shown that healthcare costs are higher among special-enrollment enrollees. For instance, actuarial firm Oliver Wyman found that individuals who obtained coverage through special-enrollment periods amassed 24% more in healthcare costs during their first three months of coverage in 2014 compared with those who enrolled during open enrollment. During the first three months of 2015, people who used special-enrollment periods had 41% higher healthcare costs than open enrollment enrollees.
