The Centers for Medicare & Medicaid Services (CMS) has moved another step closer to starting a big insurance program for public exchange insurers, the Patient Protection and Affordable Care (PPACA) risk corridors program.
CMS is putting the risk corridors program form through a federal paperwork review process. Officials put the form in a review packet with the 2014 medical loss ratio (MLR) form.
CMS says it expects 517 companies to file MLR reports for the 2014 plan year, and 91 companies to file risk corridors forms.
The PPACA minimum MLR provision requires major medical insurers to spend at least 85 percent of large-group revenue and 80 percent of individual and small-group revenue on health care and quality improvement or else pay rebates. CMS is predicting that 123 issuers will owe rebates for 2014.
The PPACA risk corridors program, which is completely separate from the minimum MLR provision, is supposed to use cash from PPACA exchange issuers with big underwriting margins to help exchange qualified health plan (QHP) issuers with underwriting margins under 3 percent.
PPACA drafters say they created the program, which is set to last for only three years, to encourage early participants to keep premiums low.
Critics of the risk corridors program describe at as a bailout for the insurers participating in the exchange program.
Humana Inc. (NYSE:HUM) has reported that it hopes to get about $51 million from the risk corridors program. The company estimates it will get $42 million from a second PPACA program — a risk-adjustment program that supposed to shift money from plans with enrollees with low risk scores to plans with enrollees with high risk scores — and $586 million from a third PPACA program — a reinsurance program that’s supposed to use money from a new health plan enrollee fee to help plans pay part of the bills of enrollees with very high claims.
Regulators in Iowa have said in a petition for a failed health insurer that the insurer was hoping to get a total of $75 million from the reinsurance and risk-adjustment programs, and $81 million from the risk corridors program.
PPACA lets the U.S. Department of Health and Human Services (HHS) use government money to make the risk corridors program whole if money from high-margin QHP issuers falls short. HHS officials have said, however, that they want to try to run the program without putting in taxpayer money.
A provision in the Consolidated and Further Continuing Appropriations Act of 2015, an emergency spending law, appears to keep HHS from adding government money to the program.