ACA Risk Management & Mitigation 3 — Questions and Answers
Question 1: The ACA's risk adjustment model uses Hierarchical Condition Categories (HCCs) primarily to:
- Predict relative medical costs based on enrollee diagnoses (Correct answer)
- Set premium rates for individual enrollees
- Determine Medicaid eligibility
- Calculate subsidy amounts for marketplace plans
Correct answer: Predict relative medical costs based on enrollee diagnoses
HCCs group diagnosis codes to estimate each enrollee's expected medical costs, which feeds into the plan's overall risk score.
Question 2: Which factor is NOT used in calculating a plan's risk score under the ACA risk adjustment methodology?
- Enrollee age and sex
- Enrollee diagnoses mapped to HCCs
- Geographic cost differences
- Premium amount charged by the plan (Correct answer)
Correct answer: Premium amount charged by the plan
Risk scores are based on enrollee demographics and health status (HCCs), not on the premiums the plan charges.
Question 3: A 'silver loading' strategy employed by some states after the CSR funding cuts is best described as:
- Adding CSR costs only to silver plan premiums to inflate benchmark subsidies (Correct answer)
- Spreading CSR costs evenly across all metal tiers
- Eliminating silver plans from the marketplace
- Requiring insurers to absorb CSR costs without premium changes
Correct answer: Adding CSR costs only to silver plan premiums to inflate benchmark subsidies
Silver loading concentrates CSR cost increases on silver plans, inflating the benchmark premium used to calculate APTC and benefiting subsidized enrollees.
Question 4: Under ACA rules, the maximum out-of-pocket limit mitigates financial risk for enrollees primarily by:
- Capping total annual cost-sharing for covered in-network services (Correct answer)
- Preventing insurers from charging copayments for preventive care
- Limiting premium increases to a fixed percentage per year
- Requiring insurers to cover all claims once the deductible is met
Correct answer: Capping total annual cost-sharing for covered in-network services
The annual out-of-pocket maximum stops enrollees from paying unlimited cost-sharing, protecting against catastrophic financial exposure for in-network covered services.
Question 5: Which ACA mechanism specifically reduces financial risk for lower-income marketplace enrollees by reducing deductibles and copayments?
- Cost-Sharing Reductions (CSRs) (Correct answer)
- Advanced Premium Tax Credits (APTCs)
- Risk Adjustment transfers
- Reinsurance contributions
Correct answer: Cost-Sharing Reductions (CSRs)
CSRs reduce out-of-pocket costs for eligible silver plan enrollees with incomes between 100–250% FPL by requiring insurers to offer enhanced actuarial value.
Question 6: An insurer concerned about risk selection from a short-term health plan market operating alongside its ACA-compliant plans should be MOST worried about:
- Healthy individuals leaving the ACA pool for cheaper non-compliant plans (Correct answer)
- Sick enrollees leaving for short-term plans due to lower premiums
- Regulators mandating risk adjustment inclusion of short-term plans
- Short-term plans filing MLR rebates
Correct answer: Healthy individuals leaving the ACA pool for cheaper non-compliant plans
Short-term plans attract healthy people who can pass underwriting, leaving the ACA pool with sicker, higher-cost enrollees — classic adverse selection.
Question 7: Under the ACA, which enrollee action most directly triggers a Special Enrollment Period that could pose adverse selection risk to insurers?
- Loss of minimum essential coverage (Correct answer)
- Voluntary cancellation of a marketplace plan
- Failure to pay premiums for two months
- Reaching the out-of-pocket maximum mid-year
Correct answer: Loss of minimum essential coverage
Losing minimum essential coverage is a qualifying life event that opens a 60-day SEP, and people experiencing this often enroll because they now need care.
ACA Risk Management & Mitigation 3
The ACA's risk adjustment model uses Hierarchical Condition Categories (HCCs) primarily to: