The U.S. Department of Health and Human Services is getting ready to ask the public how it should protect carriers from the effects of the new health insurance product sales rules.

HHS also is about to fine-tune the “3 Rs” — the three Patient Protect and Affordable Care Act risk management mechanisms; propose 2015 risk-management program fees; adjust the Small Business Health Options Program exchange rules; and make changes in the rules for everything from exchange medical plan cost-sharing limits to the annual limit on cost-sharing for stand-alone dental plans sold through an exchange.

The Centers for Medicare & Medicaid Services, the arm of HHS overseeing HHS PPACA implementation efforts, is preparing to publish the proposals in a 254-page packet of draft regulations set to appear in the Federal Register Monday.

Comments will be due 30 days after the official publication date.

CMS has had a large team working on the draft. In the section that lists who members of the public should call with any questions about the draft regulations, the agency lists 14 people. Scott Dafflitto, for example, is in charge of SHOP small-group exchange questions, and Kelly Horney is supposed to get questions about risk adjustment.

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.

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