By Virgil Dickson, Crain News Service
WASHINGTON (Jan. 6, 2014) — Some payers are pushing for nationwide implementation, rather than a state-by-state approach, to Patient Protection and Affordable Care Act policy fixes suggested by the U.S. Department of Health and Human Services (HHS) in December.
Others, however, argue for maintaining the status quo to avoid further complications for insurers. The fixes are designed to offset financial losses plans may face after the Obama administration announced it is allowing people to keep plans that do not comply with the benefit standards in the act.
Allowing people to keep the old plans became necessary after insurers began sending cancellation notices to millions of policyholders. The president responded to the political outcry by allowing insurers in states where regulators agree to let people "keep what they have."
A side effect of this decision is that insurers offering ACA-compliant plans on the exchanges are likely to be left with older and sicker patients whose costs will outstrip the amount collected from those individuals. "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," the Obama administration said in a proposed rule in December.
Medica, a Minnesota-based payer with 1.6 million members, wants to keep things as is because many states, including Minnesota, decided not to re-offer the canceled plans.
"In states that did not adopt the transitional policy, the assumptions underlying the rates have not changed and there has been no unanticipated change in the market," the company said in written comments to the proposed rule.
Plans had until Dec. 26 to comment on several suggestions that would adjust the reinsurance and risk corridor programs for payers.
Some suggested tweaks to specific suggestions made by HHS. For instance, the federal agency is considering state-specific percentage adjustments for federal reimbursement that vary with the percentage enrollment in these transitional plans in the state. So the states with the higher populations of those with noncompliant plans would be eligible for more funds.
The Blue Cross and Blue Shield Association argued for a nationwide percentage adjustment. "A state-level adjustment will be very difficult to implement in an already complex program. We support a simpler approach that applies nationwide and offers parameters known in advance to facilitate financial reporting and planning," it said.
The trade group America's Health Insurance Plans (AHIP) also argued against state-specific adjustments. As outlined in the proposed rule, if appears that HHS' intention is to apply this adjustment factor after the 2014 benefit year based on issuer-submitted enrollment counts, it contended.
"This retroactive application would prevent issuers from accurately estimating 2014 risk corridors transfers—undermining both the statutory pricing protections of the risk corridors program as well as the enhanced risk mitigation strategy contemplated in the proposed notice," AHIP said.
In addition, AHIP noted that ongoing technical problems with HealthCare.gov and recent state decisions to allow for early renewal of 2013 policies would not be reflected in the state-specific adjustment factor based on the percentage enrollment in transitional plans.
In place of this state-specific adjustment factor, it recommends a uniform, national change to the risk corridors calculation, instead of only for those states that accept the transitional policy.
This approach will be easier for HHS, state regulators, and health plans from an operational perspective, particularly since the approach contemplated by the federal agency would require ongoing state reporting of transitional plan enrollment data, AHIP argued.
This report appeared in Crain's Modern Healthcare magazine, a Chicago-based sister publication of Tire Business.