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Life Health > Health Insurance

Feds complete health risk program rules

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A federal agency has completed work on a collection of regulations that could directly affect whether health insurers in the individual and small group markets make money in 2014.

The Centers for Medicare & Medicaid Services (CMS) is preparing to publish a Patient Protection and Affordable Care Act (PPACA) “premium stabilization programs and market standards” final rule (CMS-9957-F2) in the Federal Register Oct. 30.

CMS officials report in the preamble that they received just seven public comments on the draft of the regulations that was released in February.

Some sections of the rule deal with matters such as employee counting. CMS said it will stick with a proposal to start by defining a “small employer” as an employer with 2 to 100 employees. Until 2016, a state can set the cut-off at 100.

Officials also dealt with matters such as what happens to a small employer that turns into a large employer during the course of the year. (The small group coverage must be guaranteed renewable, and the employer can keep it.)

The risk program provisions deal with the so-called PPACA “Three R’s:” PPACA temporary reinsurance, temporary risk corridor and permanent risk-adjustment programs. All are meant to protect individual and small-group health insurers against big swings in risk that occur because of PPACA-related market changes.

State and federal risk program managers will use the programs to get cash from carriers with low claims and send the cash to carriers with high claims.

The temporary programs would transfer the cash after the plan year was over.

State and federal regulators would try to use the risk-adjustment program, which resembles a Medicare Advantage risk-adjustment program, to compensate plans for covering enrollees with high risk scores while the plan year was under way.

Some of the rules deal with a “default risk-adjustment charge,” or an extra fee to be imposed on insurers that fail to provide the kind of data that would help regulators calculate risk-adjustment payments and charges. 

Some commenters, for example, asked CMS to tie the default charge to an issuer’s actual enrollment. CMS ended up agreeing with the commenters and tying the charge to actual enrollment. 

CMS said it is still working on a methodology for calculating the “per member per month” approach to be used for calculating the default risk-adjustment charges. 

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