In 2013, the Minnesota Legislature directed the Minnesota Department of Health (MDH) to study the potential costs and benefits of conducting state-based risk adjustment in Minnesota’s small group and individual health insurance markets (Laws of Minnesota 2013, chapter 108, article 1, section 65). Specifically, MDH was directed to:

Evaluate the extent to which Minnesota's All Payer Claims Database (MN APCD) data could be used for conducting state-based risk adjustment;
Collect additional data needed for the study of risk adjustment;
Conduct modeling to determine if a Minnesota-based risk adjustment model could perform better and be more cost-effective than the federal risk adjustment model; and
Submit a report to the Legislature outlining the study recommendations.

MDH retained the services of a vendor, Milliman-New York, to support this work. MDH sought input from a wide range of stakeholders, through a formal Request for Information (RFI) process and through public meetings and interviews.

Additional detail on the study approach is available in a Fact Sheet (PDF). An interim report to the Legislature (April 2014) that presented the initial findings is available at Risk Adjustment in the Individual and Small Group Market in Minnesota - A Progress Report (PDF).