Final Interim Rule – Notice of Benefit and Payment Parameters
3/6/2013 – On March 1, the Department of Health and Human Services (HHS) released a final interim rule designed to stabilize premiums to prepare for the coming of state health insurance exchanges this fall. ¬†The ACA created three programs, risk adjustment, reinsurance, and risk corridors that will work with the ¬†premium tax credits, cost-sharing reductions, medical loss ratio program and new market reforms.
The key policies mandated in this ruling, taken from the¬†HHS Fact Sheet, are as follow:
- Reducing the incentives for health insurance to avoid enrolling people people with pre-existing conditions. ¬†This policy is designed to assist insurers that provide coverage for high-risk populations and reduce the incentives for issuers to avoid only enrolling healthy individuals.
- Stabilizing premiums in the individual market for health insurance. The transitional reinsurance program is a 3-year program designed to reduce premiums and ensure market stability by helping insurers cover the costs of high-risk enrollees while aiming to lower premiums in the individual market by an estimated 10 to 15 percent in 2014.
- Protecting health insurance issuers against uncertainty in setting premium rates. ¬†The rule finalizes additional technical details on how issuers will account for profits and taxes in their risk corridors, which aligns this program with the medical loss program.
- Helping working Americans afford health insurance in the marketplaces. ¬†HHS is finalizing its proposal to make advance payments of the value of cost-sharing reductions and the mechanisms for determining the amount of the advance payment of the premium tax credit to issuers on behalf of eligible individuals. HHS is also finalizing its proposal that issuers provide cost-sharing reductions at the point of service for eligible individuals and that HHS directly reimburse issuers for the value of these reductions.
- SHOP:(Small Business Health Options Program) HHS is finalizing a number of provisions to provide qualified health plan options for small businesses. To facilitate a competitive market in the SHOP program, ¬† HHS is publishing a proposed rule outlining a transitional policy for certain operations of the SHOP to ensure market stability in 2014 and conforming SHOP special enrollment periods to those in the broader group health insurance market.
- MLR: HHS is amending the Medical Loss Ratio program, also known as the 80 /20 rule, to ensure that, beginning in 2014, issuers include premium stabilization amounts in medical loss ratio and rebate calculations. HHS is extending the annual medical loss ratio reporting deadline from June 1 to July 31, and the rebate disbursement deadline from August 1 to September 30 to take into account the premium stabilization programs. This change will allow issuers to accurately calculate their medical loss ratios while ensuring that consumers receive rebates as quickly as possible. HHS is also allowing tax-exempt not-for-profit issuers to deduct community benefit expenditures (subject to caps) and State premium tax from premium in calculating medical loss ratios and rebates. This change promotes a level playing field for issuers within each State.
The Notice of Benefit and Payment Parameters for 2014, the Payment Notice Amendment IFC, and the SHOP NPRM may be viewed at this website.