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HHS expands transitional reinsurance program to cover 100 percent of some high-cost claims

Eligible payers to receive report by June 30

The federal government will now reimburse health insurance companies for 100 percent of a certain category of high-cost claims, the Department of Health and Human Services (HHS) announced.

HHS indicated it was "pleased" to announce the move, which represents an expansion of its transitional reinsurance program that is designed to keep health insurance premiums stable by "providing payments to health insurance issuers that cover higher cost populations in the individual market." HHS had been set to refund 80 percent of non-grandfathered, reinsurance-eligible plans' covered claims costs that fall between $45,000 and $250,000.

The program is part of the Affordable Care Act's "three Rs"--reinsurance, risk corridors and risk adjustment--which some have derided as bailouts for the insurance industry, FierceHealthPayer has reported. In an analysis last year, Citigroup found that more than 85 insurers accrued $45 million in payments for risk adjustments, $1.2 billion for reinsurance and $410 million for the risk corridor program in the first half of 2014.

HHS will fully cover reinsurance claims for the 2014 benefit year because it found that reinsurance contributions exceeded the total requests for reinsurance payments, the announcement states. The department has collected $8.7 billion in reinsurance contributions for 2014, and plans to collect another $1 billion by Nov. 15. The 2014 benefit year collection target had been $12 billion, an estimate that included $10 billion for reinsurance payments, according to FierceHealthPayer.

HHS plans to send a report to each issuer of a a reinsurance-eligible plan by June 30 that details how much it will receive in reinsurance benefits for 2014, according to the department. It will then remit payments to each issuer beginning in August.

To learn more:
- here's the announcement

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HHS can't unilaterally bail out insurers, GAO says
Will insurers take a bath on risk corridors?