On December 2, 2015, CMS will publish a notice of proposed rulemaking for its Notice of Benefit and Payment Parameters for 2017 (“Proposed Rule”). The Proposed Rule articulates the federal government’s policy for health care coverage under Affordable Care Act programs and would make several notable changes, including stricter network adequacy requirements for qualified health plans offering coverage on exchanges, creation of a standardized set of benefit and cost-sharing options for exchange coverage, and standards of conduct for agents and brokers. For a more detailed analysis of the Proposed Rule, please click here to view our recent client alert.

 

The Centers for Medicare & Medicaid Services (CMS) recently sent a letter to state insurance commissioners, available here, setting forth five findings for departments of insurance to consider as they render final decisions on health insurance rates. The letter’s findings discuss cost and utilization trends as well as policy matters.

First, CMS notes that Marketplace enrollees in 2015 are, overall, lower utilizers than those who first enrolled for plan year 2014. The letter further expresses CMS’s expectation that enrolled populations will “continue to get healthier” as the pent-up demand for health care services is met. CMS’s second finding summarizes available data as indicative of overall medical cost growth remaining moderate. These two factors suggest that modest rate increases generally should be expected from issuers.

Third and fourth, CMS reiterates that, for 2014, the reinsurance rate will be 100% instead of only 80%, and that the agency expects payments into the Risk Corridors program to be sufficient to cover payments to issuers under the program. Preliminary information about payments under the Risk Corridors program is expected to become available soon—on August 14, 2015.

Finally, CMS notes that public hearings may be helpful in rate evaluations and encourages commissioners to ensure appropriate public scrutiny.

 

The Obama Administration recently announced a policy change indicating that the Fiscal Year (FY) 2015 budget sequester will not cut cost-sharing subsidies for low-income enrollees in Affordable Care Act (ACA) health plans. According to a March 10, 2014 Office of Management and Budget (OMB) report detailing the federal government’s sequestration-based spending reductions for FY 2015, and in line with the automatic reductions required by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) (as amended), the Administration has eliminated the $286 million cut in cost-sharing subsidies included in the FY 2014 report. Over the next ten years, this removal essentially will translate into $10 billion in restored cost-sharing subsidies. Had the cost-sharing subsidies been included in the sequester cuts, as they were in FY 2014, they would have been reduced by 7.3%, or approximately $580 million over ten years.

These cost-sharing subsidies, also referred to as cost sharing reductions throughout the ACA marketplace, are discounts that lower the out-of-pocket costs that enrollees must pay for deductibles, coinsurance, and copayments. As explained in detail on the HealthCare.gov website, these subsidies are only available to low-income individuals who enroll in the ACA’s Silver-tier health plan, which covers 70% of the overall cost of essential health benefits provided to enrollees.

In addition to these subsidies, and as discussed in detail on the HealthCare.gov website, low-income ACA enrollees also are eligible for premium tax credits, or advanced payments that can be used to lower an enrollee’s monthly premium costs. Similar to the premium tax credits, it is reported that the cost-sharing subsidies will also be made as advanced payments, and will be paid out of the same account as the premium tax credit.

As is the case with all budgetary balancing, the removal of the cost-sharing subsidies from the FY 2015 sequestration chopping block means that the sequestration dollars must come from elsewhere. Two new FY 2015 additions to the Centers for Medicare and Medicaid Services (CMS) sequestration roster—ACA risk adjustment and reinsurance programs—could feel the pinch.

The risk adjustment program, for example, which redistribute funds from plans with lower-risk enrollees to plans with higher-risk enrollees and protects insurers by diffusing financial risk across the market, shall be reduced by $247 million in FY 2015. Likewise, the transitional reinsurance program, which provides payments to health plans that enroll higher-cost individuals and thus protect against premium increases, shall be reduced by $731 million in FY 2015. The approximately $1 billion in combined sequestration reductions across these two programs alone could result in a changing landscape of health care costs and premiums, as health plans seek to spread those losses and recoup those funds from elsewhere.

The Centers for Medicare and Medicaid Services (CMS) published its final Notice of Benefit and Payment Parameters for 2015 (Final Rule), altering parameters for premium stabilization programs established by the Affordable Care Act (ACA). The Final Rule primarily concerns the risk adjustment, reinsurance, and risk corridors programs.

The Final Rule completes provisions related to the advance payments of the premium tax credit, cost sharing reductions, and premium stabilization programs, including certain oversight provisions for the premium stabilization programs and key payment parameters for the 2015 benefit year. Using the methodology set forth in the 2014 payment notice, the Final Rule establishes a 2015 uniform reinsurance contribution rate of $44 annually per capita, as well as the 2015 uniform reinsurance parameters—a $70,000 attachment point, a $250,000 reinsurance cap, and a 50 percent coinsurance rate. The Final Rule also decreases the attachment point from $60,000 to $45,000. To maximize the impact of the reinsurance program, CMS provides that for reinsurance contributions collected for a benefit year exceeding total requests for reinsurance payments for the benefit year, CMS will increase the coinsurance rate on its reinsurance payments up to 100 percent.

Continue Reading CMS Issues Final Notice Regarding Payment Parameters for 2015