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Regulators move to expand PPACA risk program reporting

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State insurance regulators want to know how the three big Patient Protection and Affordable Care Act (PPACA) risk-management programs — the “three R’s” programs — are affecting life insurance and property-casualty companies that write medical insurance.

Members of the Capital Adequacy Task Force, an arm of the National Association of Insurance Commissioners (NAIC) that tries to come up with tools for assessing insurers’ financial strength, endorsed several PPACA three R’s reporting requirements Sunday at the NAIC meeting in Phoenix.

The task force is part of the NAIC’s Financial Condition Committee.

The drafters of PPACA created a temporary reinsurance program to protect major medical issuers against an unexpected flood of high-cost patients; a permanent risk-adjustment program, to use cash from insurers with low-risk enrollees to help carriers with high-risk enrollees; and a temporary risk corridors program, to use cash from insurers with high underwriting margins to help insurers with low margins.

Officials at the U.S. Department of Health and Human Services (HHS) have been slow to give details about how the three R’s programs will work. State regulators have discouraged insurers from using payments insurers hope to get from one of the programs, the risk corridors programs, in solvency calculations.

Regulators say they would like to know what insurers are thinking about the three R’s.

In one NAIC meeting packet, the members of the Property and Casualty Risk-Based Capital Working Group include a draft of a set of instructions dubbed “R020 Underwriting Risk – Experience Fluctuation Risk.”

In a draft footnote, the drafters ask the insurance company that fills out the form whether the company believes the medical insurance business numbers provided reflect the effects of the PPACA three R’s programs. 

The draft footnote recognizes that giving numbers related to the three R’s programs “may not be possible or may be misleading in this informational page,” according to the draft.

“If the company is concerned that the values may be misleading, it may wish to highlight this concern in the footnote,” the drafters say.