A major Patient Protection and Affordable Care Act (PPACA) insurer risk-management program may pay eligible insurers less than $362 million of the $2.9 billion in cash they were hoping to collect.
Officials at the Center for Consumer Information & Insurance Oversight (CCIIO), the division of the Centers for Medicare & Medicaid Services (CMS) responsible for running the PPACA programs that affect the commercial health insurance market, announced the risk corridors program revenue shortfall Thursday, in a memo posted on the CCIIO section of the CMS website.
The risk corridors program is supposed to use PPACA exchange plan issues with good operating earnings in 2014, 2015 and 2016 to help insurers that get weak operating results during those years.
Whether the risk corridors program can come up with the cash to pay ailing health insurers as much as $362 million will depend on how well the government does at getting thriving health insurers to pay into the program, officials say.
Officials earlier complained about the quality of the risk corridors program data submissions, and they said about half the insurers had worked on short notice to improve and resubmit their data.
Program managers will begin collecting on payables in November and sending the cash it gets to the insurers owed the receivables in December, officials say.
Earlier this year, analysts at Standard & Poor’s Ratings Services (S&P) estimated the program might get in only enough cash to pay 10 cents on the dollar.
Officials at CMS, an arm of the U.S. Department of Health and Human Services (HHS), increased the amount of claims eligible for benefits from another PPACA risk-management program, a reinsurance program, and they also announced that, even though the reinsurance program had generated too little revenue to pay as much extra cash into the U.S. Treasury as hoped, it had earned more than enough to pay eligible 2014 claims. Some hoped that might be a sign CMS could also find a way to pay a large share of the risk corridors program obligations.
Kevin Counihan, the CCIIO director, told state insurance regulators in July that they should take the risk corridors program into account when reviewing health rate proposals for 2016.
“As stated in our final payment notice for 2016, ‘We anticipate that risk corridors collections will be sufficient to pay for all risk corridors payments,’” Counihan wrote in the letter.