On March 1, 2013, CMS released a proposed rule, an interim final rule and a final rule—set for publication in the Federal Register on March 11, 2013—that implement the risk adjustment, reinsurance and risk corridor programs established under the Affordable Care Act (ACA).  These programs will reduce incentives for insurers to avoid individuals with pre-existing conditions and offer assistance to insurers covering high-risk enrollees, as well as stabilize premiums in the individual market.

According to CMS, the final rule on the Notice of Benefit and Payment Parameters expands standards from earlier rules and provides further information on a variety of programs, including those involving permanent risk adjustment, traditional reinsurance and temporary risk corridors.  These programs were created under the ACA to stabilize premiums when the individual and small group markets take effect in 2014.  The permanent risk adjustment program will offer assistance to health insurance plans providing coverage to high-risk populations.  This program coordinates with the traditional reinsurance program, which is designed to reduce premiums and help cover the cost of high-risk enrollees in the individual market.  The risk corridor program limits the extent of issuer losses and gains, protecting against uncertainty in rate setting for qualified health plans.  The final rule also further explains advance payments of the premium tax credit, cost-sharing reductions, medical loss ratio and the Small Business Health Options Program (SHOP), and their coordination with the risk adjustment, reinsurance and risk corridor programs.

The interim final rule amends the Notice of Benefit and Payment Parameters to adjust risk corridor calculations to align with the single risk pool provision of the ACA.  CMS invites comments on the interim final rule, which CMS must receive no later than sixty days after publication in the Federal Register.

CMS also issued a proposed rule regarding SHOP that outlines a transitional policy to ensure market stability in 2014.  The proposed rule also aligns the SHOP special enrollment periods with those in the broader group health insurance market.  Comments on the proposed rule must be received no later than thirty days after publication in the Federal Register.

To view the final rule, please click here.  To view the interim final rule, please click here.  To view the proposed rule, please click here.