The Center for Consumer Information & Insurance Oversight (CCIIO) is giving health insurers advice that could cut the insurers’ earnings this year and increase the size of the rebate checks going out to enrollees.
Miller — a former Oregon insurance commissioner — looked at how insurers should handle fees related to the Patient Protection and Affordable Care Act (PPACA) when they are coming up with PPACA medical loss ratios (MLRs) and MLR rebate payment amounts.
PPACA requires health insurers to spend at least 85 percent of large-group health insurance revenue and 80 percent of individual and small-group health insurance revenue on health care or quality improvement efforts or else make up the difference by sending rebates to the enrollees.
Miller concluded that insurers can include PPACA-related payments, such as a new PPACA care effectiveness research fee and new PPACA risk-management program fees, in their costs only if they have made the payments during the reporting year.
The big PPACA insurer fee requirements will start to take effect in 2014.
When making PPACA MLR and PPACA rebate calculations, “issuers may not exclude ACA assessments or fees they expect to incur in future MLR reporting years,” Miller said in the bulletin.
Federal law “does not provide for estimated regulatory fees for future years to be deducted from premium used in MLR and rebate calculations for the reporting year,” Miller said.
Miller reports to CCIIO Director Gary Cohen.
Questions about how insurers should handle PPACA-related payments have also come up in California, and at the Health Care Reform Regulatory Alternatives Working Group at the National Association of Insurance Commissioners (NAIC).
In California, insurance regulators have objected to efforts by some insurers to include reserves for future PPACA fee obligations in current health insurance rates.
At the NAIC alternatives working group, regulators have noted that insurers may have to pay about $20 billion in PPACA-related fees in 2014, or 3 percent of their revenue, and that states need to decide when insurers can include the fees in their premiums.