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Life Health > Health Insurance

House Energy to CMS: You owe Treasury PPACA reinsurance money

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A group of House Republicans says health insurers are getting $3.5 billion in Patient Protection and Affordable Care Act (PPACA) reinsurance program revenue that was supposed to go to the U.S. Treasury.

The House Energy and Commerce oversight subcommittee has scheduled a hearing on how the Centers for Medicare & Medicaid Services (CMS) is handling PPACA reinsurance program revenue program for 9:30 a.m. EDT Friday.

The subcommittee is continuing a battle that Sens. Orrin Hatch, R-Utah, and Marco Rubio, R-Fla., brought to public attention in March.

See also: Rubio: PPACA reinsurance program should pay Treasury first

PPACA banned most forms of medical underwriting, and most benefit design strategies insurers have used to protect themselves against catastrophic claim risk, starting Jan. 1, 2014.

To protect insurers against unexpected spikes in catastrophic claim risk, drafters created a reinsurance program that’s supposed to use a broad fee imposed on health coverage issuers for the 2014, 2015 and 2016 coverage years to help individual coverage issuers pay the bills of enrollees who have catastrophic medical expenses during those years.

Section 1341 of PPACA calls for the U.S. Department of Health and Human Services (HHS) to collect $25 billion in PPACA revenue for 2014 through 2016, send $5 billion to the U.S. Treasury and use $20 billion to meet reinsurance obligations to eligible health insurers.

CMS, an arm of HHS, has said it will use the PPACA reinsurance program revenue it gets to make good on PPACA statutory reinsurance program obligations to health insurers until it collects enough program revenue to meet the obligations.

CMS has not given a clear accounting for reinsurance program revenue. In April 2015, it said it expected to collect $9.7 billion of the $12 billion PPACA calls for it to collect for 2014.

In a hearing memo, the full House Energy and Commerce Committee’s Republican staff says PPACA Section 1341 requires CMS to pay the U.S. Treasury before it meets the reinsurance program obligations.

The Congressional Research Service (CRS) “determined that, because the statute is not ambiguous, it appears that CMS’ actions contradict the plain language of the law, suggesting that the agency’s action would not receive deference if it were challenged in court,” the analysts write in the memo.

See also:

House Ways and Means schedules health tax hearing

How to pay your PPACA reinsurance bill


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