ACA Risk Management & Mitigation 2 — Questions and Answers
Question 1: Under the ACA's risk adjustment program, which entity collects and distributes payments among insurers in the individual and small group markets?
- CMS on behalf of each state (Correct answer)
- The U.S. Treasury
- State insurance commissioners directly
- The Federal Reserve
Correct answer: CMS on behalf of each state
CMS operates the permanent risk adjustment program and transfers funds from lower-risk to higher-risk plans in the individual and small group markets.
Question 2: An insurer's risk adjustment transfer amount is calculated based on the difference between its average actuarial risk and:
- The state average actuarial risk (Correct answer)
- The national actuarial risk benchmark
- The insurer's prior year risk score
- The MLR corridor threshold
Correct answer: The state average actuarial risk
Risk adjustment transfers compare each plan's average actuarial risk against the statewide average to determine whether a plan pays into or receives from the pool.
Question 3: Which ACA provision was designed specifically to protect insurers from unexpectedly high claims in the first years of marketplace operation through a shared losses mechanism?
- Reinsurance
- Risk Corridors (Correct answer)
- Risk Adjustment
- Medical Loss Ratio rebates
Correct answer: Risk Corridors
Risk corridors limited insurer losses by requiring HHS to cover a portion of losses exceeding a set threshold and collecting gains above another threshold.
Question 4: A health plan with a risk score BELOW the market average under the ACA risk adjustment program will most likely:
- Pay into the risk adjustment pool (Correct answer)
- Receive funds from the risk adjustment pool
- Be exempt from risk adjustment transfers
- File for reinsurance reimbursement
Correct answer: Pay into the risk adjustment pool
Plans with below-average risk scores (healthier enrollees) pay transfers to compensate plans with higher-risk enrollees.
Question 5: Under the ACA's temporary reinsurance program (2014–2016), which enrollees' claims primarily triggered reinsurance payments to insurers?
- High-cost enrollees whose claims exceeded the attachment point (Correct answer)
- All enrollees with chronic conditions
- Enrollees who switched plans mid-year
- Medicaid expansion enrollees
Correct answer: High-cost enrollees whose claims exceeded the attachment point
Reinsurance payments were triggered when an individual's claims exceeded a set attachment point, helping plans cover catastrophic costs.
Question 6: Which risk mitigation strategy do ACA-compliant plans use to protect against adverse selection from enrollees gaming open enrollment?
- Continuous coverage requirements with coverage gaps penalties
- Waiting periods of up to 90 days for new enrollees
- Special Enrollment Period eligibility verification (Correct answer)
- Pre-existing condition underwriting
Correct answer: Special Enrollment Period eligibility verification
ACA marketplaces verify qualifying life events for Special Enrollment Periods to prevent individuals from enrolling only when they need care.
Question 7: Under the ACA, an insurer that fails to meet the 80% MLR threshold in the individual market must:
- Pay rebates to policyholders (Correct answer)
- Suspend new enrollment
- Increase premiums for the next year
- Transfer funds to the risk adjustment pool
Correct answer: Pay rebates to policyholders
Insurers spending less than 80% of premiums on medical care and quality improvement must rebate the difference to individual market policyholders.
ACA Risk Management & Mitigation 2
Under the ACA's risk adjustment program, which entity collects and distributes payments among insurers in the individual and small group markets?