The Center for Consumer Information & Insurance Oversight (CCIIO) hopes to speed up the process of getting federal risk management program cash out to health insurers.
CCIIO says its parent agency, the Centers for Medicare & Medicaid Services (CMS) will pay some Patient Protection and Affordable Care Act (PPACA) reinsurance benefits for the 2015 benefit year to eligible insurers by March 2016.
“Reinsurance funds not paid out through this early payment will be paid out in late 2016, as part of the standard reinsurance data submission, validation, calculation and payment process,” CCIIO officials say in a memo posted on the CMS website.
The announcement means that, if the final 2016 reinsurance program parameters are the same as the preliminary parameters CCIIO has already given, insurers will get half of their reinsurance payments for 2015 early in 2016 and half in late 2016.
It’s not clear whether CMS has paid insurers any of the money the PPACA reinsurance program owes the insurers for 2014.
CCIIO recently estimated that a second PPACA risk management program, the risk corridors program, which is supposed to get cash from thriving PPACA exchange plan issuers to help plan issuers with weak underwriting results in 2014, 2015 and 2015, may take in less than 13 percent of the cash it needs to cover the 2014 obligations for that program.
PPACA has prohibited health insurers from using information about people’s health problems when issuing or pricing new coverage since January 2014.
PPACA drafters created the risk corridors program, the reinsurance program and a third “three R’s” program, a risk-adjustment program, to protect health insurers against the risk that the new underwriting and pricing rules could swamp them with new, unexpected catastrophic claim risk.
The reinsurance program uses a broad tax on most health plan enrollees to bring in cash. The program is supposed to use the cash to compensate issuers of PPACA-compliant individual coverage for part of the cost of catastrophic claims filed in 2014, 2015 and 2016.
For the 2014 benefit year, for example, the program was supposed to help an insurer when an enrollee ended up with more than $45,000 in covered medical bills. At one point, the program was going to pay 80 percent of the cost of claims over the $45,000 “attachment point,” or reinsurance deductible, and below a cap of $250,000.
CMS ended up announcing that it had collected enough reinsurance program revenue for 2014 to cover 100 percent of the cost of catastrophic claims between the $45,000 attachment point and the $250,000 cap.
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CMS told insurers it would make 2014 benefit year reinsurance payments from July through September this year, but it later complained about getting what appeared to be inaccurate data from insurers. It has not posted an update on the progress of three R’s program payments.
In the new memo, CCIIO officials say the 2015 attachment point will be $45,000 and the reinsurance cap will be $250,000. The initial estimated 2015 coinsurance amount, or amount the reinsurance program will cover, is 50 percent of the amount between the 2015 attachment point and the $250,000 reinsurance cap, officials say.
CCIIO will announce the final 2016 reinsurance program coinsurance rate in June 2016, officials say.