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Life Health > Health Insurance

Feds say death may hurt a health insurer's ACA program cash flow

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The Centers for Medicare & Medicaid Services (CMS) will consider changing Affordable Care Act program billing and payment arrangements to keep a health insurer alive, but it cuts off some types of ACA payments to dead health insurers.

Officials at the Center for Consumer Information & Insurance Oversight, which is part of CMS, talk about the rules governing ACA insurer program payables and receivables in a memo on “netting of payments and charges.”

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A state can ask CMS to change how it handles a stack of ACA payables and ACA receivables for a struggling health insurer, if that will help keep the insurer’s health insurance in effect, insurance oversight office officials say in the memo.

“In those cases,” the officials say, “CMS will refrain from netting advance payments for the months for which the coverage would otherwise have been terminated.”

But insurance oversight officials warn states against counting on ACA subsidy payments to help a dead insurer lower the amounts the dead insurer owes CMS for other ACA programs. 

Once an insurer stops providing health coverage, CMS stops sending the insurer ACA subsidy payments, insurance oversight officials say.

The CMS insurance oversight office runs the Affordable Care Act programs that affect the commercial health insurance market.

The office oversees the Affordable Care Act health insurance exchange programs in all states; runs the exchange program for states that are unwilling or unable to run their own exchange enrollment systems; and administers the premium tax credit subsidy system and the cost-sharing reduction subsidy system.

The cost-sharing reduction program helps low-income exchange plan users cope with their plan deductibles and co-payment requirements.

The insurance oversight office also runs three big ACA risk management program: a reinsurance program; a risk corridors profit margin buffer program; and a risk-adjustment program.

A health insurer that sells an ACA public exchange plan may end up owing several different types of payables to CMS, and recording several different types of receivables that should be coming to it from CMS.

“Netting” is the process the insurer uses to subtract the amounts that should be coming from CMS from the amounts the insurer is supposed to pay to CMS.

CMS uses netting to help speed up the process of running the ACA programs, officials say.


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