Risk Management & Mitigation Flashcards

A health plan discovers its risk adjustment transfer payment will be significantly higher than expected. The BEST risk mitigation response is to:

Answer: Improve diagnosis coding accuracy and data submission completeness

Accurate and complete diagnosis coding ensures the plan's risk score reflects its true enrollee health burden, potentially reducing unexpected transfer obligations.

Which ACA provision most directly mitigates the risk that large employers will drop coverage and shift employees to the marketplace?

Answer: Employer Shared Responsibility Payment (ESRP)

The ESRP (employer mandate) requires applicable large employers to offer affordable minimum-value coverage or pay a penalty, discouraging them from dropping coverage.

Under the ACA's guaranteed issue requirement, which risk management tool do insurers use INSTEAD of medical underwriting to manage their risk pool?

Answer: Annual open enrollment periods with limited special enrollment

Since the ACA bans medical underwriting, insurers rely on limited open enrollment windows and SEP verification to prevent adverse selection.

A risk manager at an insurance company wants to quantify the impact of high-cost claimants on plan financials. Which metric is MOST relevant?

Answer: Concentration of claims among top 1–5% of enrollees

A small percentage of enrollees typically generate the majority of medical costs, so analyzing claims concentration helps quantify catastrophic risk exposure.

Which ACA rule prevents insurers from using 'death spirals' — where only sick people enroll, causing premiums to rise, driving healthy people out — by stabilizing the risk pool?

Answer: Community rating with age bands limited to 3:1

Community rating prevents insurers from charging sick enrollees more, while age bands (3:1 ratio) limit but don't eliminate age-based pricing variation.

Under the ACA, an insurer offering plans in a state that has NOT established its own reinsurance program (state innovation waiver) must:

Answer: Participate in the federal reinsurance framework if applicable

States can apply for Section 1332 waivers to establish state-based reinsurance programs; without one, insurers rely on whatever federal mechanisms remain available.

An ACA marketplace plan with a high proportion of enrollees who selected coverage during a Special Enrollment Period should MOST expect:

Answer: Higher-than-average claims costs due to adverse selection

SEP enrollees tend to be sicker than open enrollment enrollees because they often enroll specifically because they need immediate care.