Effective Risk Adjustment is fundamental to having a successful Healthcare Exchange.  The value of Risk Adjustment is that it aligns premium payments to actual enrolled risk, not projected enrolled risk.  This results in lower initial premium rates and more stable renewal rates since the need for additional premium loads to compensate for unknown risk is removed.

Aligning premium payment to enrolled risk:

● Creates incentives for insurers to focus on managing risk as opposed to avoiding risk.
● Allows for fair and competitive marketplaces for premium rates.
● Lowers rates by eliminating pricing loads that are typically added for unknown risk.
● Enables renewal premium rates that are based on risk of the entire population.
● Prevents divergence of rates due to adverse selection, which leads to the death spiral.         
● Allows for premium reallocation to occur between health plans without any impact on employers, employees and individuals.
● Eliminates the need for any enrollment participation restrictions typically associated with choice based offerings.

Benu’s Risk Adjustment consists of:

Risk Assessment
Utilizing its customized processes and tools, Benu assesses the risk of each individual in a Healthcare Exchange. Using demographic and utilization data (claims and/or pharmacy), Benu creates member level risk scores, which can be aggregated into different groupings (e.g. by health insurer, by product, by geography, by employer, by total pool).

Premium Reallocation
Based on risk scores of enrolled populations, Benu determines appropriate premiums for the various insurers and manages premium reallocations among them.

Rate Adjustment
Based on risk scores of enrolled populations, Benu determines appropriate renewal premium rates by insurer, which can then be presented to employers, employees and individuals.  

Risk Pooling
Benu provides risk sharing programs where claims are pooled and their costs shared proportionally across Health Plans. These arrangements can be established on a specific basis or on an aggregate basis, as well as by individual participants or by groupings of various risk pools. Risk Pooling compensates insurers for costs not captured by Risk Adjustment.