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Feds post PPACA lifeboat program numbers

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Officials at the Centers for Medicare & Medicaid Services (CMS) today posted health insurance companies’ 2014 reinsurance and risk-adjustment report.

See also: Feds: “We’ll send some PPACA lifeboat money in December”

In the report, CMS, an arm of the U.S. Department of Health and Human Services (HHS) told affected health insurers how much cash they can hope to get, and how much cash they may have to pay into, two major new Patient Protection and Affordable Care Act (PPACA) health insurance company buffer programs: a temporary reinsurance program and a permanent risk-adjustment program.

The three-year reinsurance program is supposed to use an assessment on all insured plan enrollees to pay part of the medical bills for holders of PPACA-compliant health coverage who had catastrophic medical claims in 2014.

The risk-adjustment program is supposed to shift cash from health insurers that had low-risk enrollees in PPACA-compliant individual and small-group plans in 2014 to health insurers that had high-risk enrollees in PPACA-compliant individual and small-group plans that year.

CMS says the reinsurance program received $8.7 billion in contributions and will pay about $7.9 billion to 484 eligible insurer companies. In California, for example, the most populous state, initial reinsurance program payout totals range from about $347,000 for Local Initiative Health Authority for Los Angeles County to about $401 million for Blue Cross of California, a unit of Anthem Inc. (NYSE:ANTM).

CMS says 758 insurers are participating in the risk-adjustment program, with 469 issuers participating in the individual market, 291 in the individual catastrophic market, and 628 in the small-group market. Those insurers will transfer about 10 percent of the premiums received in the individual market, 21 percent of the premiums received in the catastrophic market, and 6 percent of the premiums received in the small-group market.

In California, for example, Blue Cross may have to pay about $182 million in individual market risk-adjustment transfers, and it might get about $23 million from other insurers in connection with small-group risk-adjustment transfers.

CoOportunity Health, a nonprofit Iowa insurer that failed partly because of uncertainty about the PPACA risk-management programs, could be on track to get $25 million in reinsurance program money and $7.6 million in individual market risk-adjustment money. It might have to pay $3.4 million in risk-adjustment money to other small-group coverage providers. 

PPACA drafters created those PPACA risk-management programs and a third program, the PPACA risk corridors program, to protect health insurers against the possibility that the many PPACA policy design rules, underwriting rules and programs that came to life Jan. 1, 2014, could swamp some health insurers with unexpected tidal waves of claim risk.

CMS officials have been talking to health insurance company representatives about how the lifeboat programs will work through guidance documents and webinars, but the U.S. Government Accountability Office (GAO) reported a few weeks ago that some insurance company reps felt as if they were having trouble getting clear information about program compliance details.

Health insurers are supposed to use the data in the reports that came out today in risk corridors program filings that are due July 31.

In a recent webinar slidedeck, CMS officials talk about what health insurers should do if they disagree with the numbers in the reinsurance and risk-adjustment report. For a look at some of what officials say in the slidedeck, read on. 

Tangled cord

1. An insurer has to stick with a tight protest schedule and can ask for a reconsideration only if the requested adjustment seems to be a big deal.

The reinsurance and risk-adjustment protest process has several different levels.

An insurer can ask for a reconsideration of the initial figures provided; ask for an informal hearing before a CMS hearing office to object to the reconsideration decision; and ask for a CMS administrator review of the hearing officer’s decision.

1. An insurer must ask for a CMS reconsideration of the initial numbers within 60 calendar days from today.

2. An insurer that wants an informal hearing must ask for the hearing within 30 calendar days after receiving the reconsideration decision.

3. An insurer that wants a CMS administrator review of a hearing decision must ask for that within 15 calendar days after receiving the hearing decision. Whether the administrator, or the administrator’s delegate, reviews the hearing decision is up to the discretion of the administrator.

An insurer can start the protest process in the first place only if the amount in dispute amounts to at least 1 percent of the applicable risk program payment or charge involved or $10,000, if 1 percent of the applicable risk program payment or charge happens to be less than $10,000.

See also: Marilyn Tavenner to leave CMS post 

Police tape that says "keep out"

2. The grounds an insurer can use to justify a request for reconsideration are limited.

An insurer can ask for reconsideration only if the insurer wants to contest an HHS processing error, alleges that HHS applied the relevant methodology incorrectly, or alleges that HHS made a math error.

See also: What if you disagree with an exchange?


3. The Web form insurers must use to ask for reconsideration is less than perfectly user friendly.

Insurers have to use a specific Web form to ask for reconsideration of the information in the reinsurance and risk-adjustment reports.

“Request for Reconsideration Web Form cannot be saved after it is started,” CMS officials say in the slidedeck. “You must complete the submission in one sitting. We encourage you to gather and review all necessary information prior to starting the Request for Reconsideration Web Form.” 

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