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Life Health > Health Insurance

Feds: "We’ll send some PPACA lifeboat money in December"

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Health insurance company financial reporting executives who were hoping to relax by the beach in July may have to put away their beach towels.

Officials at the Center for Consumer Information & Insurance Oversight (CCIIO) explained how the big three Patient Protection and Affordable Care Act (PPACA) risk-management programs will eat the financial executives’ summer in a collection of answers to insurers’ questions about the “three R’s” programs.

See also: PPACA three R’s programs: Insurers cry out

Officials told insurers this week that:

  • The PPACA reinsurance program will send each affected health insurer information about how much PPACA reinsurance money it can expect to receive for 2014 on June 30.

  • An insurer has to include the reinsurance payment information given out on June 30 in a critical filing for the PPACA risk corridors (RC) underwriting profit margin protection program. The filing for the risk corridors program, which could be the equivalent of a life raft for some insurers with bad underwriting results, is due July 31.

  • Risk corridors program managers will collect cash from the health insurers that did well in 2014 from October 2015 through November 2015.

  • Risk corridors program managers “will begin to make RC payments to issuers in December 2015.” 

The answers could affect commercial health insurance agents, brokers and consultants by determining how interested insurers are in continuing to sell health insurance in 2016.

What is CCIIO?

CCIIO is part of the Centers for Medicare & Medicaid Services (CMS). CMS is part of the U.S. Department of Health and Human Services (HHS).

HHS and CMS set up CCIIO to oversee the HHS programs created by the Patient Protection and Affordable Care Act of 2010 (PPACA) that affect the commercial health insurance important.

What is a PPACA risk-management program?

The people who wrote PPACA added many product design and underwriting rules that could increase health insurance claims for all insurers, and change the way the sickest people choose health coverage in unexpected ways.

To keep a flood of sick new enrollees from destroying health insurers, and give insurers confidence to hold premiums as low as possible, the PPACA drafters created a temporary reinsurance program, to use cash from all insured people to protect issuers of individual coverage against enrollees with catastrophic claims; a temporary risk corridors program, to use cash from exchange plan issuers with high underwriting profit margins to help insurers with weak margins; and a permanent risk-adjustment program, to use cash from insurers with relatively low-risk enrollees to help insurers with relatively high-risk enrollees.

CCIIO has given information about how the programs will work slowly, and in spurts, and often in unexpected places. The new answers to the three R’s questions, for example, appear mostly on the password-protected Regtap website. Ordinary people cannot search for information on the Regtap site using ordinary search engines. They have to sign up for Regtap accounts, and go to Regtap to search Regtap, to know what’s there.

What else has CCIIO said about the three R’s programs recently?

CCIIO has also answered many other three R’s questions on Regtap. Many deal with administrative procedures, but some could affect how much money insurers get from the three R’s programs.

See also: Assurant confident about benefits unit sale

One interesting answer deals with PPACA reinsurance filings, and another interesting filing deals with the kinds of insurer operations that may be protected by the risk corridors program.

CCIIO officials puzzled many earlier this week by announcing that the PPACA reinsurance program has received enough cash to pay 100 percent of the value of the eligible reinsured claims, rather than the 80 percent coinsurance level promised.

The announcement contained no other information about program revenue or projected outlays.

One of the new Regtap answers hints that providing 100 percent reinsurance may help ease the burden on the PPACA risk corridors program, which is suspected by some to be facing a big funding shortfall.

CCIIO officials say in the answer that an insurer should “report the full, expected payment received for reinsurance” when filling out the risk corridors program filing. The reinsurance amount included in the filing should include the full amount that CMS gives an insurer on June 30, “including any amounts that are subject to holdback or sequestration,” officials say.

The risk corridors answer seems to imply that federal regulators may try to get cash out of any healthy insurers that sold even a small amount of exchange qualified health plan (QHP) coverage in 2014, and that regulators may try to use the program to help sick insurers that sold even a small amount of exchange QHP coverage that year.

Insurers eligible for the risk corridors program are supposed to include the information for the program with the reports they already file to comply with PPACA medical loss ratio (MLR) review requirements.

CCIIO officials handle a question about the experience insurers should put in the risk corridors columns in the MLR form.

An insurer that offered at least one certified QHP through a PPACA public exchange in 2014 should fill out the risk corridors columns, officials say. An affected insurer should report the experience of all of its non-grandfathered, PPACA-compliant plans, including both off-exchange PPACA-compliant products and QHPs, in the risk corridors columns, officials say.

An insurer does not have to put information about grandfathered business or products that fall outside of the PPACA rules, such as dental insurance or hospital indemnity insurance, in the risk corridors columns.

See also: CMS posts risk-management proposals


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