CMS NEWS
FOR IMMEDIATE RELEASE
June 30,
2015
Contact: CMS Media Relations
(202) 690-6145 | CMS
Media Inquiries
CMS
continues to implement the premium stabilization programs
Today, the Centers for Medicare
& Medicaid Services (CMS) took the next steps in implementing two of the
Affordable Care Act’s premium stabilization programs – risk adjustment and
reinsurance – that help keep premiums affordable and provide consumers with a
range of coverage choices. CMS released a report detailing the estimated
reinsurance payments by issuer and providing additional information on the
premium stabilization programs.
“These important programs are
protecting consumers’ access to a wide range of affordable coverage choices in
a new health insurance market in which no one can be denied coverage or charged
higher premiums simply due to a pre-existing condition,” said Kevin Counihan,
CEO of the Health Insurance Marketplaces. “The early results for the risk
adjustment and reinsurance premium stabilization programs demonstrate that
these programs are working as intended, which will help keep premiums stable
and encourage insurance companies to compete on quality and price, not who can
attract the healthiest enrollees.”
Before the health care law, the
individual markets in most states allowed issuers to deny coverage to people
with pre-existing conditions, preventing many Americans from accessing quality,
affordable health coverage. The Affordable Care Act changed that by
guaranteeing people who may have a medical condition with access to such
insurance plans. The premium stabilization programs are designed to stabilize
the market as guaranteed access is implemented and reduce the incentive to
enroll only healthy and low-risk individuals.
The transitional reinsurance
program helps keep premiums stable and affordable for consumers by protecting
against high-cost claims from individual market consumers, which could
otherwise force insurance companies to raise their premiums. The permanent risk
adjustment program protects consumers’ access to a range of affordable coverage
options by reducing the incentive for insurance companies to seek to insure
only healthy individuals. The temporary risk corridors program, which is not
covered in today’s report, keeps premiums affordable and stable for consumers
by mitigating uncertainty in claims costs during the first three years of the
Marketplaces, which encourages issuers to price competitively. Risk corridor
payments will be calculated later this year.
CMS has worked with issuers for
months on the data submissions for the premium stabilization programs,
providing technical assistance to make sure that insurance companies submitted
complete data. After analyzing the data submitted by issuers of their reinsurance
contributions and requested reinsurance payments, CMS determined that the
number of eligible high cost claim expenses were lower than expected for the
2014 benefit year. Because of these lower than expected claims, CMS recently
announced that, consistent with its regulations, instead of paying 80 percent
of eligible high cost claim expenses (that is, expenses between $45,000 and
$250,000), all eligible claim expenses for the 2014 benefit year would be paid
at 100 percent.
The report released today details
the total estimated reinsurance payments by issuer and also provides summary
level information on the program. The report includes issuers’ risk adjustment
charge or payment information. In addition, the report includes an early
assessment of the risk adjustment program that shows the program is working as
intended by compensating issuers who enrolled higher risk individuals, helping
protect against adverse selection within a market. Issuers will use the
reinsurance and risk adjustment amounts to calculate their risk corridor
payments and medical loss ratio rebates, if any.
To read the Risk Adjustment & Reinsurance report, visit: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/index.html
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