Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
By Sara Hansard
Nov. 25 --The Department of Health and Human Services released a proposed rule to establish the 2015 payment parameters for cost-sharing reductions, advance premium tax credits, reinsurance and risk adjustment programs under the Affordable Care Act.
The proposal (CMS-9954-P), released Nov. 25, would implement standards for programs “that will have numerous effects, including providing consumers with affordable health insurance coverage, reducing the impact of adverse selection, and stabilizing premiums in the individual and small group health insurance markets and in an [insurance marketplace],” the HHS said.
It also proposes additional standards for composite rating and the privacy and security of personally identifiable information.
The rule is set for Dec. 2 publication in the Federal Register, with comments due Dec. 26.
The 2015 proposal also includes a user fee to be paid by insurers. Under the proposed rule, the 2015 user fee rate for the federally facilitated marketplace would be 3.5 percent of premiums for plans sold in the marketplace, the same as in 2014 (42 PBD, 3/4/13;42 PBD, 3/4/13).
A user fee adjustment allowance for administrative costs was proposed in the 2015 benefit year to reimburse third-party administrators that provide payment for contraceptive services for enrollees in some self-insurance group health plans under the proposed rule.
HHS's rules allow that “accommodation” for institutions that are affiliated with religious groups that don't believe in birth control or abortifacients, although the rules are being challenged in court.
A provision in the proposal would exempt self-insured group health plans that don't use a third-party administrator from paying a reinsurance fee for the 2015 and 2016 benefit years.
Such plans include multiemployer plans, and Senate Republicans, concerned about a statement in a final CMS rule issued in October, proposed legislation Nov. 19 aimed at preventing the federal government from exempting multiemployer plans from the reinsurance fee (224 PBD, 11/20/13;40 BPR 2740, 11/26/13).
The proposed rule noted that on Nov. 14, the federal government announced a policy change under which it will allow insurers to continue plans that aren't in compliance with ACA requirements, such as covering 10 categories of “essential health benefits.”
Issuers have set their 2014 premiums for individual and small group plans by estimating the health risk of enrollees in accordance with the requirements of the law, assuming that people enrolled in the noncompliant plans would participate in the “single risk pools” envisioned by the ACA, the proposed rule said. People who stay in the noncompliant plans “may have lower health risk, on average, than enrollees in individual and small group plans subject to the 2014 market rules,” it said.
“If lower health risk individuals remain in a separate risk pool the transitional policy could increase an issuer's average expected claims cost for plans that comply with the 2014 market rules,” it said. An increase in expected claims costs for compliant plans could lead to “unexpected losses,” it said.
To help address the effects of the transitional policy on the risk pool, HHS said it is “exploring modifications to a number of programs.”
The proposed rule outlines various options under consideration, including adjustments to the reinsurance and risk corridor programs that are in effect 2014 through 2016 under the ACA to help insurers mitigate the risk of insuring more people with costly medical conditions. Under the ACA, insurers are prohibited from discriminating against people with health problems by refusing to cover them or charging them more than healthy people.
“Recognizing that allowing people to keep their 2013 policies will probably make the 2014 risk pool somewhat more costly, they are increasing the reinsurance payments out of that $10 billion fund,” Washington and Lee University Law School Professor Timothy Jost told Bloomberg BNA in a telephone interview.
This is a reference to the requirement, in Section 1341 (b)(3)(B)(iii) of the ACA, that $10 billion for reinsurance contributions are to be collected in 2014 for the reinsurance payment pool, an amount that will decrease in subsequent years.
The ACA imposes a reinsurance fee for 2014 through 2016 on group health plans to establish a reinsurance pool for insurers in the individual health market to lessen the risk of increased premiums for covering people with medical problems.
The total amount to be collected under the reinsurance program from insurers and self-insured group plans is $25 billion over three years. A total of $20 billion is to fund the reinsurance pool, while the remaining $5 billion will be paid to the U.S. Treasury.
The 2015 uniform reinsurance contribution rate would be $44 annually per capita, and 2015 uniform reinsurance payment parameters of $70,000 for the attachment point, $250,000 for the reinsurance cap, and a 50 percent coinsurance rate.
The proposed rule also would decrease the attachment point for 2014 from $60,000 to $45,000.
In addition, “in order to maximize the financial effect of the transitional reinsurance program, we propose that if reinsurance contributions collected for a benefit year exceed the requests for reinsurance payments for the benefit year, we would increase the coinsurance rate on our reinsurance payments, ensuring that all of the contributions collected for a benefit year are expended for claims for that benefit year,” it said.
In self-insured group plans, the attachment point is the amount of claims above which a reinsurance policy pays a percentage of the claims for a policy year experience.
Under a model act considered by the National Association of Insurance Commissioners, states would be prohibited from selling stop-loss policies with minimum specific attachment points lower than $60,000 per year.
The Self-Insurance Institute of America Inc. opposed the NAIC effort, saying it would prompt employers to reduce coverage. Self-insured plans face fewer regulations under the ACA. Smaller businesses have begun using self-insured plans with low attachment points.
The proposed rule would establish a methodology for estimating average per capita premiums for calculating the premium adjustment percentage for 2015.
The rate is used to establish increases for several parameters in the ACA, including the maximum annual limit on cost sharing and deductibles for health plans in the small group market for 2015, it said. The maximum annual limit on cost sharing for the 2015 benefit year would be the same as 2014 for cost sharing reduction plan variations.
The proposed rule expands on provisions of previous rules to stabilize premiums by allowing the HHS to audit state-operated reinsurance programs, contributing entities, and issuers of risk adjustment covered plans and plans eligible for reinsurance. It proposes several provisions regarding the HHS-operated risk adjustment data validation process as well.
In addition, the proposed rule includes standards with respect to composite rating, privacy and security of personally identifiable information, the annual open enrollment period for 2015, the actuarial value calculator, annual limits in cost sharing for stand-along dental plans, the meaningful difference standard for qualified health plans offered through the federally facilitated marketplace, patient safety standards for issuers of qualified health plans and the Small Business Health Options Program.
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Text of the proposed rule is at http://op.bna.com/hl.nsf/r?Open=bbrk-9dst8m.
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