Feds ponder rule-change pay

The Obama administration recently decided to encourage states to let individual and small-group policies that were in effect Oct. 1, stay in force in 2014, even if the policies fail to meet the new PPACA coverage rules that take effect Jan. 1, 2014.

In a section on dealing with the effects of that move, CMS officials suggest that HHS could help carriers deal with changes to the “transitional” rules by adjusting one of the 3 Rs programs — the “risk corridors” program.

HHS would compensate for loss in revenue from the sale of PPACA-complaint individual and small-group policies by increasing the risk corridor program profit margin floor from 3 percent of after-tax profits. Carriers that earn solid profits might end up providing cash for carriers that earn profit margins of less than 3 percent because of the transitional rules.

HHS also may tinker with a PPACA requirement that carriers spend at least 80 percent of individual and small-group premiums on health care and quality improvement efforts.

“We request comment on all aspects of these potential approaches to mitigate any potential impact of the transitional policy,” officials said.

Also in the proposed regulations:

• CMS suggests that HHS could increase the administrative charge for the risk adjustment program to about $1 per person in 2015, from 96 cents per person in 2014.
• HHS expects administration of another 3 Rs program, a temporary reinsurance program, to collect $8.025 billion in 2015. PPACA requires $2 billion in revenue to go to the Treasury. The administrative expenses would amount to $25 million, or 0.4 percent of the $6 billion that would be paid to insurers. 
• The PPACA temporary reinsurance program would cut its “attachment point,” or deductible, to $45,000 in 2014, from the $60,000 amount originally proposed, but the attachment point would increase to $70,000 in 2015.
• In 2015, a state-based or HHS-run SHOP exchange that wanted to let exchange agents and brokers sell SHOP plans through their own websites could do so.

See also:

• Feds complete health risk program rules
• Feds eye PPACA storm shelter rules
• IRS completes health penalty rules