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What to know about the insurers’ PPACA safety padding

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Federal regulators have set the filing deadline for a major Patient Protection and Affordable Care Act (PPACA) insurer risk management program, the risk corridors program, on the next Friday the 13th — Feb. 13, 2015.

Affected insurers have to tell the Centers for Medicare & Medicaid Services (CMS) how many people they covered through individual and small-group policies during the 2014 benefit year, and how many of those enrollees had “transitional policies,” or “grandmothered policies.

CMS says it will accept the forms only from Monday, Feb. 9, through Friday, Feb. 13. Officials at CMS talk about the filing time line in a paperwork review act notice.

In theory, difficulties with meeting the filing deadline could threaten the financial performance, or even the solvency, of some of the affected major medical insurers.

In Iowa, for example, insurance regulators have suggested that uncertainty about PPACA risk-program payments may be partly responsible for its concerns about the stability of a new health insurer in their state.

Insurers and regulators have noted that claims in grandmothered blocks of health insurance business seem to be causing more problems than blocks of PPACA public exchange plan business.

To learn more about the risk corridors program and the program filing requirements, read on.

Umbrella protecting a man from the rain

1. The history of an umbrella program

PPACA set up a temporary risk corridors program for all sellers of non-grandfathered individual and small-group major medical coverage.

The risk corridors program is supposed to use cash from insurers with good underwriting experience to shore up competitor insurers with very weak underwriting experience.

Republican critics of PPACA have described the program as a bailout for insurers.

PPACA drafters said they created the original risk corridors program in an effort to protect the insurers against the possibility that the new PPACA pricing and underwriting rules that took effect Jan. 1, 2014, could swamp them with high-cost enrollees and drive them out of business.

The U.S. Department of Health and Human Services (HHS) also set up a separate, add-on version of the risk corridors program for insurers in states that adopted a so-called “transitional policy” that CMS announced in November 2013 — a decision to give state insurance regulators the option of working with insurers to let consumers keep pre-PPACA coverage in force after Jan. 1, 2014.


2. Insurers and CMS officials have different ideas about timelines

Insurers would like to have as much time as possible to file their transitional risk corridors program reports, and they would like CMS officials to announce the program adjustments made as a result of the data as quickly as possible.

Originally, CMS said the filings would be due around Jan. 23, 2015. 

UnitedHealth Group Inc. (NYSE:UNH) asked for CMS to push the submission deadline back to April 30, 2015, in part to sync with filing deadline for the PPACA reinsurance and risk-adjustment programs.

The Blue Cross and Blue Shield Association asked for CMS to say how it would adjust risk corridor program protection levels in January.

CMS officials said they can adjust the filing deadline a little, but that they can’t push it back to April, and that they can’t announce the adjustment percentages as quickly as the Blues suggested.

“We understand the importance of issuers being able to estimate the effect of the transitional adjustments on risk corridors payments in their end-of-year financial reports,” officials wrote in the review notice. “However, we do not anticipate that CMS will be able to receive complete data submissions from issuers, calculate the adjustments, and publish the adjustments by Jan. 31, 2015.”

The new, February deadline “will allow CMS time to calculate the adjustment amounts, with the goal of publishing these amounts as soon as possible,” officials said.


3. A health insurer that operates in multiple states can bundle information for separate states in the same reporting form

The 39 that have allowed grandmothering have about 2,400 affected issuers, but many of those issuers are actually single-state affiliates of companies that operate in multiple states.

Because the average insurance issuer operates in six states, the data packaging rule will reduce the number of filings that insurers have to submit to about 400, officials estimated.

See also: Feds post PPACA risk program forms


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