ACA Risk Adjustment – Smarter Programs for Marketplace Plans
The Affordable Care Act (ACA) opened new opportunities for payers, but also introduced unique challenges. Since plans cannot deny coverage based on pre-existing conditions, issuers face significant financial risk when a higher proportion of high-cost members enroll.
That’s why a robust ACA Risk Adjustment Program is essential—just as in Medicare Advantage. But there’s one critical difference: under the ACA model, a portion of premiums—sometimes as high as 25% of total revenue—is redistributed from lower-risk to higher-risk plans. Accuracy isn’t just compliance; it directly impacts financial performance.
How It Works
To measure risk accurately, ACA issuers must submit encounter and supplemental chart review data in XML format through the HHS EDGE Server. This process validates data, ensures inclusion in transfer calculations, and prevents penalties or default charges for incomplete submissions.
Similar to Medicare Advantage’s CMS-HCC risk models, HHS applies its own HHS-HCC models, updated annually. The key distinction?
Medicare Advantage: risk scores are calculated at the member level.
ACA Marketplace: scores are calculated at the plan level, with payments and transfers redistributed across issuers.
Why It Matters
Accuracy = Advantage → Plans that deliver complete, high-quality EDGE submissions see fairer risk transfer payments.
Compliance is Critical → CMS requires both minimum data quantity and quality thresholds to avoid default charges.
HHS Updates Annually → Using EDGE data, HHS recalibrates models regularly, meaning plans must stay proactive to remain competitive.
The Bottom Line
In the ACA Marketplace, the savviest plans win by submitting the most accurate data. With Health Data Max, you don’t just meet EDGE requirements—you maximize risk capture, protect revenue, and stay audit-ready.