State insurance regulators have asked a team to look into a proposal for changing the Patient Protection and Affordable Care Act (PPACA) risk-adjustment program.
The Health Insurance and Managed Care Committee, a top-level committee at the National Association of Insurance Commissioners (NAIC), talked about the proposal Monday, during a session at the NAIC’s spring meeting in New Orleans.
The committee referred the issue to its Health Actuarial Task Force, according to a meeting summary posted on the NAIC’s website.
The Consumers for Health Options, Insurance Coverage in Exchanges in States (CHOICES) Coalition told the committee that the Centers for Medicare & Medicaid Services (CMS), the federal agency that runs the risk-adjustment program, should give state insurance regulators the flexibility to adjust the program to fit local conditions.
The CHOICES Coalition represents several of the member-owned, nonprofit Consumer Operated and Oriented Plan (CO-OP) carriers that started up in January 2014. The coalition also represents at least two other small, relatively new health insurers.
The coalition members say the current PPACA risk-adjustment program, which is supposed to use cash from insurers with relatively low-risk enrollees to provide a safety cushion for insurers with a high percentage of high-risk enrollees, is too hard for small young health insurers to use.
Many small, new insurers were unable to include any risk-adjustment program transfer estimates in their 2014 annual financial statements because they knew they had no reliable data they could use to come up with the estimates, the coalition says in a discussion paper.
“Even the minority of carriers that guessed the direction of their transfers (either positive or negative) still tended to significantly underestimate the size of the transfer,” the coalition says.
A division of CMS recently held a meeting that gave insurers a chance to talk about how CMS ought to handle the risk-adjustment process.
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