Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...
The Department of Health and Human Services and the Office of Personnel Management each released a proposed rule Nov. 30, one to expand standards issued earlier aimed at reducing incentives for insurers to avoid enrolling sick people, and the other to establish a multistate insurance plan program for exchanges that start in 2014.
The 373-page Notice of Benefit and Payment Parameters for 2014, issued Nov. 30 by the Centers for Medicare & Medicaid Services, provides more information on risk programs established under a final rule HHS released in March, as well as on advance payments of premium tax credits and cost-sharing reductions, CMS said in a release. The proposed rule (CMS-9964-P) is to be published in the Dec. 7 Federal Register, with comments due 30 days later.
To reduce incentives for health insurers to avoid enrolling people with pre-existing conditions, the permanent risk adjustment program would assist health plans that cover individuals with relatively high health care costs and would help ensure that those who are sick have access to coverage they need, CMS said in the proposed rule.
In March, HHS released a final rule under the Affordable Care Act establishing reinsurance, risk corridor, and risk adjustment programs designed to eliminate incentives for insurers to avoid covering people with health problems, stabilize premiums in the individual and small group markets, and help make coverage more affordable (see previous article). Under the final rule, HHS will establish risk programs if states do not set up their own in health insurance exchanges.
People enrolling for coverage in plans in the exchanges in 2014 are, at least initially, likely to have higher-than-average medical problems, as many of them are likely to have been uninsured. That has raised fears that the cost of covering people in the exchanges will be high, leading to more expensive premiums and lower enrollment.
CMS proposed a risk adjustment methodology to use when it is operating risk adjustment programs on behalf of a state. The agency also outlined its proposed approach to validating risk adjustment data “to instill confidence in the program,” it said. States that are operating an exchange and their own risk adjustment program can propose a different methodology, CMS said. States must operate their own exchanges to establish their own risk adjustment programs, an agency spokeswoman told BNA in an email.
The three-year transitional reinsurance program is designed to reduce medical risk for issuers and reduce premiums for enrollees in the individual market to ensure market stability with the implementation of new consumer protections in 2014, CMS said.
ACA sets a fixed, national amount for the reinsurance program, and CMS proposed uniform reinsurance payment parameters for the program. CMS proposed that a state may supplement the reinsurance payment parameters, but a state must pay for the supplementary parameters with additional state reinsurance collections or state funds, instead of funds collected by HHS under a national contribution rate, it said.
CMS also proposed a per capita rate under which contributions would be collected annually by HHS from applicable health insurers and group health plans and proposed standards for calculating the contributions. In addition, it proposed excluding some types of plans from the reinsurance contribution requirement.
The temporary risk corridors program would protect qualified health plans (QHPs) that will be sold in the exchanges from uncertainty in rate setting from 2014 to 2016 by having the federal government share risk in losses and gains, CMS said. The agency proposed to account for profits and taxes in the calculations and to align the program with the medical loss ratio program that requires insurers to spend at least 80 percent of premiums on medical claims or quality improvements.
CMS proposed further clarification regarding administering advance payments of the premium tax credit, proposing to make advance payments to issuers on behalf of certain individuals. It also proposed that issuers provide cost-sharing reductions at the point of service for eligible individuals, and the agency would directly reimburse issuers for the payments.
Under ACA, people with income between 100 percent and 400 percent of the federal poverty level are eligible for subsidies.
CMS also proposed a user fee for health insurers participating in a federally facilitated exchange that “would be commensurate with fees charged by state-based exchanges,” it said.
In its 122-page proposed rule on Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges, OPM laid out proposed standards for the new program created by ACA. The proposed rule (3206-AM47) is to be published in the Dec. 5 Federal Register, with comments due Dec. 30. OPM said it will issue a final regulation next year.
The multistate plan program (MSPP) “will promote competition in the insurance marketplace and ensure consumers have more high quality, affordable insurance choices,” OPM said in a fact sheet.
ACA directs OPM to enter into contracts with private health insurance issuers to provide at least two multistate plans (MSPs) to be offered in the exchanges in 2014, the fact sheet said. At least one of the issuers must be a nonprofit entity. OPM will enter into contracts and certify the plans.
Blue Cross Blue Shield plans are considering offering MSPs, officials of the Blue Cross and Blue Shield Association have said (see previous article).
OPM said the proposed rule sets out five primary objectives:
• ensuring the choice of at least two high-quality products to consumers participating in each exchange;
• promoting competition in the health insurance market;
• offering plans from the same issuer to families or small businesses that may reside or operate in more than one state;
• providing strong, effective contractual oversight of the MSPs; and
• working cooperatively with states and HHS to ensure a “level playing field” for QHPs and MSPs.
ACA directs OPM to implement the MSPP in a manner similar to the contracting provisions of the Federal Employees Health Benefits Program (FEHBP), OPM said. The agency draws on its experience of more than 50 years in administering FEHBP, it noted. “OPM has been able to administer this robust health insurance program efficiently, keeping administrative costs low,” it said.
ACA requires the MSPP to be governed by all state and federal laws that apply to QHPs, OPM said. The proposed rule reflects that intention “except to the extent any such laws are inconsistent with these regulations, OPM guidance, or OPM's contracts,” it said.
The proposed rule sets out standards for how OPM would coordinate with states and HHS to approve rates, standards for rating, medical loss ratios, and an MSP issuer's participation in the reinsurance, risk adjustment, and risk corridor programs, it said.
It sets out OPM's process for MSP application and contracting procedures, including terms of contracts and contract renewals or nonrenewals.
It also sets out how OPM would monitor contract performance, including ensuring quality, preventing fraud and abuse, and establishing contract compliance actions.
The proposed rule also sets out a process and standards for handling appeals for enrollees that are denied claims.
By Sara Hansard
CMS's Notice of Benefit and Payment Parameters for 2014 is at http://op.bna.com/hl.nsf/r?Open=bbrk-92jmdm. A fact sheet on the benefit and payment parameters is available in HealthDocs™. OPM's Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges is at http://op.bna.com/hl.nsf/r?Open=bbrk-92jmnh.
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