3 ways proposed PPACA risk program rules could trip you up

1. You could miss out on important, data-filled, not-very-public reports that give insiders early information about how health insurers are doing.

In one section of the NAIC proposal, for example, the authors suggest that reporting entities should provide “sufficient data” to support their estimates of how much cash they should be getting from risk adjustment program.

The “sufficient data” section of a statutory accounting report is supposed to include information about “patient encounter and diagnosis code date” and patient default risk scores.

The recommendation underscores how closely agents and brokers may have to pay attention to health insurers’ statutory accounting reports. The reports may suddenly include far more information on what kinds of people an insurer is covering and what kinds of claims the insurer is paying. 

2. Brokers and agents may see wild swings in premiums, as insurers make decisions about whether they can or cannot collect the risk program money they were expecting to collect.

Insurance regulators normally let insurers assume that they will get most of the money they are expecting to get better-established government programs.

Regulators are still deciding just when they will “admit” the cash that’s supposed to be coming from the three R’s programs.

In a section on the risk corridors program, for example, regulators say an insurer can count risk corridors program receivables as admitted assets “until determination of impairment or payment denial is received from the governmental entity or government-sponsored entity administering the program.”

If the insurer decides the risk corridors receivables are uncollectible, “any uncollectible receivable shall be written off and charged to income in the period the determination is made.”

3. Disputes over just what risk program money insurers can, must and cannot admit may gum up health insurers’ operations and slow efforts to develop rates.

In a discussion section, NAIC paper drafters note that this version of the paper note that they have tried to take a conservative approach to what insurers can admit. “Impairment evaluations were stressed and nonadmission of amounts after notification of denial even if appeals are pending was added,” officials say.

Whether the actual rules end up leaning toward the tighter side or the looser side, insurers, accountants and regulators may face long, distracting fights over what the numbers ought to be.