New CMS rule targets risk corridor program
A new regulation issued by the Centers for Medicare and Medicaid Services Friday focuses on the risk corridor program, which transfers money the U.S. Department of Health and Human Services collects from successful insurers to those that weren't as lucky, reports the Washington Examiner.
In March, HHS implemented a state-level adjustment to make risk corridors budget neutral. The Obama administration now states health insurance companies can count on government funding if higher-than-expected losses occur, according to the 436-page rule.
"In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers. In that event, HHS will use other sources of funding for the risk corridors payments, subject to the availability of appropriations," notes the report.
Republican Sens. Marco Rubio (R-Fla.) and Rep. Tim Griffin (R-Ark.) introduced a bill earlier this year to repeal risk corridors, which they called bailout for insurance companies that could target taxpayers for huge liabilities.
The "three R's" of the ACA have been under scrutiny of critics who believe risk corridors, reinsurance and risk adjustment are most certainly bailouts, while other supporters praise the programs as ways to keep premiums in check, FierceHealthPayer previously reported.
The new rule stresses a conscientious effort to maintain budget neutrality. "For the 2015 benefit year, we are adjusting the risk corridors formula to help mitigate [qualifed health plan] issuers' unexpected administrative costs. Although our initial modeling suggests that this adjustment can increase the total risk corridors payment amount made by the federal government and decrease risk corridors receipts, we believe that this temporary program will be budget neutral on the net over three years."
The new ruling also highights how much insurers can pay into and receive from the risk corridors program this year. As an attempt to avoid costly premium hikes, the rule hopes to lower the cost threshold at which HHS pitches in to pay for overly sick patients from $70,000 to $45,000.
ACA debate: Risk corridors, reinsurance, risk adjustment on the table
$5.5B 'bailout' for insurers included in 2015 budget
Coverage extensions, payment updates will help payers plan ahead
2014 begins with slew of reform taxes for insurers