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Life Health > Health Insurance

Why that PPACA insurer payment delay is bad for you

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The federal government is putting off the day when it checks to see which health insurers got too much money, and which got too little money, from the Patient Protection and Affordable Care Act (PPACA) cost-sharing reduction (CSR) program.

The program helps PPACA exchange plan users with incomes under 250 percent of the federal poverty level — the core of the exchange plan market — pay deductibles, co-payments and coinsurance amounts.

The Centers for Medicare & Medicaid Services (CMS), an arm of the U.S. Department of Health and Human Services (HHS), has been paying the insurers cost-sharing reduction money in advance. Eventually, insurers and CMS are supposed to go through a cost-sharing reduction reconciliation process, to correct any payment errors that might have occurred because of inaccuracies in enrollee income information or other information.

CMS created one simplified CSR payment calculation system for big plans, and another simplified CSR calculation system for smaller plans.

The CSR calculation system for the smaller plans is working poorly, and many insurers are having trouble upgrading their systems quickly enough to use the more complicated standard system this year, according to officials at the Center for Consumer Information & Insurance Oversight (CCIIO), the arm of CMS in charge of handling PPACA rules and programs that affect commercial health insurance.

To help plans cope with the calculation programs, CMS is pushing the reconciliation date for the 2014 plan year to April 2016, from this April.

Timothy Jost, a law professor who represents consumer interests in proceedings at the National Association of Insurance Commissioners, wrote about the delay in a blog entry on the website of Health Affairs, a health finance academic journal.

The delay affects subsidy payments for relatively low-income people who may not be big buyers of high-end personal protection insurance, and it involves payments from the government to issuers of PPACA public exchange plans, not insurers’ payments to consumers.

Why should you care? For some possible reasons, read on.

Ferocious kitten

1. Any delays in correcting subsidy underpayments could favor big, well-established insurers.

If CMS knows that it overpaid many insurers, the delay could be a quiet way to give the insurers time to come up with the money to pay excess cost-sharing reduction subsidy money back.

But, if CMS underpaid many carriers, delays in reconciliation could hurt the small, new, cash-strapped insurers more than the exchange gorillas. Some of the ferocious kittens of the exchange system may really need the cash they could get if they went through the reconciliation process quickly.

Man walking on a tight rope toward a tangle of rope.

2. The delay raises questions about whether any other PPACA provisions that affect insurers’ back-office operations are working as expected, or will work as expected within a reasonable frame of time.

If exchange plan issuers are having trouble getting CMS accurate CSR reconciliation numbers, what evidence is there that their other administration systems are working properly?

See also: 3 ways the PPACA exchange picture has changed

Whispering birds

3. News about the delay came out through a password-protected website.

CCIIO announced the reconciliation date change for CMS in a notice posted at, a semiprivate CMS website that can’t be searched through ordinary search engines. Laypeople who have not registered for Regtap can look at documents on Regtap only if they know the exact link for the document, and it’s not clear, based on site policy warnings, whether it’s legal for laypeople to look at the information on the site.

Steven Brill recently wrote in America’s Bitter Pill about how communication problems at HHS, CMS and CCIIO affected the development of the PPACA public exchange system.

The CMS decision to announce the reconciliation date change on Regtap, rather than on a fully public website, may reflect a lingering lack of emphasis on communication efforts.


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