- The concepts of selection bias and risk adjustment
- The implications and justification for applying risk adjustment
- The methodologies involved in setting employer contribution rates and application of risk adjustment
- Illustrative examples in the application of risk adjustment
Faculty: Benjamin J. Diederich, FSA, MAAA, Consulting Actuary, Milliman
Employees value choice when it comes to health benefits. When employers facilitate these choices, the method for setting employee premium contributions can create selection bias toward certain options. Selection bias happens when a sicker and more costly population tends to choose one option over another. In order to reduce the selection bias, employers should adjust each option for morbidity. Risk adjustment is used to adjust applicable costs of two or more cohorts of people so all cohorts can be compared as if each had the same morbidity.
Understanding the concepts and methodologies surrounding setting employer plan contribution rates, and the application of risk adjustment in setting contribution rates is important not only for employer health benefit managers and benefit consultants, but also is critical knowledge for stakeholders impacted by this process, including health plans, third party administrators, health systems and provider networks in commercial risk-sharing arrangements and solutions providers working with these stakeholders.
In this session, Milliman helps to provide a deeper understanding of the concepts of selection bias and risk adjustment, the methodologies involved in setting contribution levels without and with risk adjustment, and insights and implications of the application of risk adjustment in various settings.
Please join us on Thursday, January 16, 2020, at 1 PM Eastern as Milliman's Ben Diederich shares strategies and methodologies for overcoming bias in employee plan selection by incorporating risk adjustment in setting employer plan contributions, in this special 45-minute HealthcareWebSummit event: Addressing Plan Selection Bias With Risk Adjustment: Milliman Insights on Morbidity and Employer Contributions.
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