Changes to Health Plan Risk Protection Program Proposed by HHS

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By Sara Hansard

Aug. 29 — Changes would be made to the Affordable Care Act's program for protecting insurers that cover sicker patients under a proposed rule released Aug. 29 by the Department of Health and Human Services.

Beginning in 2017 “the proposed policies will take important steps to strengthen one of the Marketplace's key tools for protecting consumers' access to high-quality, affordable coverage options: the risk adjustment program,” the Centers for Medicare & Medicaid Services said in a release. The proposed rule would make the program “even more effective at pooling risk, allowing issuers to focus on meeting the needs of consumers,” it said.

The ACA marketplaces have lost major insurers UnitedHealth Group, Aetna and Humana, among others, as issuers have pulled back because of heavy losses on the plans. A major reason for the losses has been that the marketplaces have attracted a sicker population of enrollees than expected.

The HHS Notice of Benefit and Payment Parameters for 2018 (CMS-9934-P) (RIN:0938-AS95), the latest of annual rulemaking governing the ACA marketplaces, is to be published in the Federal Register Sept. 6, with comments due 30 days after publication.

“The rule is prioritizing stability in the market and focused on the risk mitigation programs which insurers have pointed to as a reason for potential sustainability issues of the market,” Elizabeth Carpenter, senior vice president with Avalere Health, told Bloomberg BNA Aug. 29. “Given the recent announcements, low enrollments and increased concern over stability of the market, the rule definitely wants to profile and highlight the changes to risk adjustment.”

2017 Updates for Partial-Year Enrollees

Updates are proposed beginning in 2017 to better reflect higher health costs associated with enrollees who are not enrolled for a full 12 months, the CMS said in the release. Open enrollment for 2017 is from Nov. 1 through Jan. 31, 2017.

Beginning in 2018 the proposed rule would use prescription drug utilization data to improve the ability of the risk adjustment program to predict the health risks of enrollees, the CMS said.

Carl Schmid, deputy executive director of the AIDS Institute, told Bloomberg BNA Aug. 29 that including the cost of prescription drugs in risk adjustment calculations will mean insurers “will not have an excuse for high coinsurance and discriminatory plan design.” The AIDS Institute and other patient advocacy groups have accused insurers of discrimination against people with high-cost diseases by requiring higher cost sharing for expensive drugs.

However, Schmid said, the proposed rule would limit the prescription drug data to “not that many classes of drugs.” The HHS is concerned that including more classes of drugs in the risk adjustment formula may lead to doctors prescribing more drugs, he said. But insurers receive the risk adjustment payments, not doctors, he said.

High-Cost Risks Spread

Also in 2018 the proposed rule would establish transfers “that will help to better spread the risk of high-cost enrollees, a change that would improve the risk-sharing benefits of the program,” the CMS said. In an Aug. 29 blog posting, Marketplace Chief Executive Officer Kevin Counihan said a portion of costs exceeding $2 million for an individual would be shared among issuers, which “would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases.”

The proposed rule also asks for comment on ways to address the costs of healthier enrollees, Counihan said. “Our goal is to update risk adjustment for all types of enrollees, to ensure that issuers can have confidence in the program as they design products to attract all types of consumers,” he said.

Small, new plans, in particular nonprofit Consumer Operated and Oriented Plans set up with government funding under the ACA, have had to make large payments under the risk adjustment program, and they have complained that the program doesn't adequately reflect the health risks of their enrollees.

“We include proposals to give new and growing issuers more flexibility in calculating their medical loss ratios, and to avoid instances where issuers who are adjusting their individual market or group market portfolios would inadvertently trigger a ban on participating in the individual or group market,” Counihan said in his blog.

Tools to Assess Networks

Consumers would get additional tools for assessing the networks of marketplace plans. The CMS has started a pilot program in some states to include the network assessment tools.

Standardized plan options that are to become available in 2017 would be broadened to accommodate rules in some states that limit cost sharing under those plans. But the proposed rule would allow standardized plans to include options for high coinsurance in states that don't limit payments, which Schmid said the AIDS Institute is concerned about.

Comments are being sought on whether a requirement should be eliminated that some issuers participating in the federally facilitated marketplaces also offer coverage through the federally facilitated Small Business Health Options marketplaces. Blue Cross Blue Shield plans that have been subject to that requirement have opposed it.

The proposed rule would also create multiple child age bands that address instances in which consumers could face large premium changes after turning 21, and it would amend regulations that require guaranteed renewability to provide additional flexibility for issuers to remain in an insurance market in some situations, the CMS said.

Special enrollment periods that allow consumers to enroll outside of normal enrollment sessions in the event of life changes such as the birth of a child or a change in employment would be codified “to ensure the rules are clear and to limit abuse,” the CMS said. Insurers have pointed to higher costs for people who sign up for coverage during special enrollment periods, and they have called for limiting them.

The CMS also asked for suggestions to further improve the risk pool, such as additional changes to special enrollment period policies and coordinating benefit rules between Medicare, Medicaid and the marketplace.

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

For More Information

The HHS Notice of Benefit and Payment Parameters for 2018 (CMS-9934-P) (RIN:0938-AS95) is at

Counihan's blog posting is at

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