A first-come, first-serve approach may be fine for selling ice cream, but it’s not a good fit for health insurance reinsurance programs.

Members of the Health Insurance and Managed Care Committee at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., come to that conclusion in a draft of a letter commenting on proposed U.S. Department of Health and Human Services (HHS) standards related to reinsurance, risk corridors and risk adjustment for health insurance.

HHS is designing the risk management programs to implement provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) that are supposed to require health insurers to sell coverage on a guaranteed issue, mostly community-rated basis starting in 2014.

One section of the HHS proposal suggests that health insurers could submit reinsurance claims either on a rolling basis or using a standard deadline.

In the NAIC committee’s draft response, officials suggest that reinsurance facilities must take care not to spend available funds to quickly. “That would reward carriers on a first-come, first-served basis,” officials say in the draft comment letter. “Instead, to the extent that valid claims for reinsurance payments exceed a state’s funds, all reinsurance claims shall be paid on uniform proportional basis.”

But the reinsurance filing deadline must be coordinated with timelines for minimum medical loss ratio (MLR) calculations, officials say. The PPACA MLR provisions require insurers to spend 85% of large group premiums and 80% of individual and small group premiums on health care and quality improvement efforts.

“Timeframes should be no longer than when MLR and risk corridor need to be reported,” officials say, adding that states should be given as much flexibility as possible to accommodate their unique market circumstances.

- Allison Bell

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