The Actuarial Standards Board (ASB) of the American Academy of Actuaries recently approved exposure drafts of proposed revisions of Actuarial Standard of Practice (ASOP) No. 45, The Use of Health Status-Based Risk Adjustment Methodologies, and ASOP No. 49, now titled Medicaid Managed Care Capitation Rates.
ASOP No. 45 applies to actuaries when performing actuarial services with respect to selecting or using health status-based risk adjustment models to quantify differences in morbidity across organizations, populations, programs or time periods. It does not apply to actuaries when designing, reviewing, or modifying health status-based risk adjustment models (including recalibration). The ASOP does not apply to actuaries when performing actuarial services related to programs that establish health-related obligations for an extended period of time. Notable changes from the existing ASOP include revising the scope to explicitly exclude actuarial services with respect to designing, reviewing, or modifying risk adjustment models; and revising guidance to better capture concepts related to quality and consistency of input data across organizations and time periods and with the data used to develop the models.
ASOP No. 49 applies to actuaries when developing, certifying, or reviewing Medicaid managed care capitation rates including, but not limited to, developing or certifying on behalf of a state to meet the federal requirements for actuarially sound capitation rates; developing or certifying on behalf of an MCO, if required as a component of a capitation rate bid or capitation rate acceptance; developing, certifying, or reviewing a department of insurance capitation rate filing; reviewing or opining on behalf of an MCO; and reviewing on behalf of a government agency. Notable changes from the existing ASOP include providing additional examples of the types of work that may be in scope without modifying the scope of the standard; and adding guidance on additional items the actuary should take into account when developing managed care adjustments.
The comment deadline for both drafts is Sept. 1, 2026. Information on submitting comments can be found in the drafts.
