Troubled health plan paperwork: What to know

State and federal regulators once filled their websites with drafts of the documents that would be needed to set up and run the new programs created by the Patient Protection and Affordable Care Act of 2010 (PPACA).

Now, agencies seem to be spending more time drafting the documents needed to monitor and close health insurers and other coverage issuers with problems, and to deal with the effects of plan shutdowns on the rest of the health care system.

The Health Risk-based Capital Working Group, part of the National Association of Insurance Commissioners (NAIC), has posted a new draft of a revision of a form for reporting on “Excessive Growth Charge for Start-Up Companies.”

The Center for Consumer Information and Insurance Oversight (CCIIO), part of the U.S. Department of Health and Human Services (HHS), has developed a PPACA risk-adjustment program form for “Issuer(s) Exiting Individual and Small Group Markets” in the 2016 benefit year.

The new tone of the paperwork is one of the symptoms of the same kinds of challenges facing health insurance agents and brokers.

For a peek at what’s in there, read on.

Excessive growth risk form revision

NAIC regulators began thinking that they ought to track rapidly growing health insurers in August 2014, when organizers of some rapidly growing Consumer Operated and Oriented Plan (CO-OP) carriers and their HHS regulators were still bragging about how great their enrollment numbers looked.

Regulators use risk-based capital (RBC) numbers to summarize how well equipped an insurer appears to be to meeting its obligations.

Originally, regulators thought the usual method for calculating excessive growth charges was too hard on new health insurers. The Capital Adequacy Task Force, part of the Health Risk-Based Capital Working Group, then found that a new adjustment it was considering resulted in no penalties for insurers that did worse than they said they would do.

The current draft shows that a “safe harbor” level of RBC growth is equal to the growth rate in premiums plus 10 percentage points.

A new company could use projected amounts for the prior year, if its home-state regulator let it do that, but the company would have to explain the projections it used.

PPACA risk-adjustment exit form

PPACA calls for the individual and small group coverage issuers in each market to participate in a risk-adjustment program for that particular market.

The players in the market with enrollees who appear to have a low level of health risk are supposed to put in cash that will go to the issuers that appear to have high-risk enrollees.

One question is: What will happen if some of the issuers that were in the market during a benefit year leave? Will CCIIO, HHS, state regulators or anyone else have the ability to collect cash from the departing issuers?

The risk-adjustment exit form may give CCIIO some basic information about the market departures.

CCIIO is asking departing issuers for their contact information, and their main reason for leaving the market. An early draft includes reason options such as “insolvency” and the latest draft lets the issuers come up with their own wording.