Legislative Regulatory Update
Representatives of the Self-Insurance Institute of America, Inc. (SIIA) today met with senior officials of the U.S. Department Health & Human Services (HHS) to discuss proposed regulations implementing a transitional reinsurance program as required by the Affordable Care Act (ACA).The ACA provides that each state must establish a transitional reinsurance program (in the form of a non-profit entity) to help stabilize premiums for coverage in the individual health insurance market during the first three years (2014-2016) of state insurance exchange operation.
This reinsurance program is to be funded by both health insurance issuers and self-insured employers. The aggregate contribution required to be collected for the program for all states is $10 billion for plan years beginning in 2014, $6 billion for plan years beginning 2015 and $4 billion for plan years beginning in 2016.
Much of the meeting discussion centered around a provision in the proposed regulation stating that program contributions should be made “by third party administrators on behalf of the self-insured groups plans,” as this wording has sparked confusion as to who is ultimately responsible for the contributions.
HHS clarified that they do not intend to hold TPAs financially liable for the contribution requirements, but rather they hope to utilize TPAs to identify self-insured employers in each state for purposes of assessment. The regulators acknowledged that details for this approach have yet to be developed and invited additional input from SIIA.
Another major discussion topic was whether contributions by self-insured plans should be made based on the number of covered lives or calculated based on medical expenses paid by plans. HHS had invited comments on this question and during today’s meeting they advised that this issue was still an open question but signaled that the per-life approach would likely be chosen due to perceived simplicity.
While this contribution methodology decision will be communicated in the final rule scheduled to be published in the first quarter of 2012, the specific financial implications for self-insured plans will not be known until October of next year, when HHS is expected to announce the specific contribution rate (i.e. dollar amount per life – assuming they chose this methodology).
Also not clear at this time is when self-insured plans will be assessed and what enforcement mechanisms will be in place to ensure compliance.
The issue of state high risk pools was explored with the regulators, with SIIA making the case that there should not be a need for these risk pools when the insurance exchanges begin in 2014, but if they do continue to exist they should be able to access the transitional reinsurance programs. HHS acknowledged the logic of these comments and advised they were still studying the issue.
Finally, SIIA used the opportunity to press the case that stop-loss insurance is not health insurance for any purpose under the ACA and therefore should not be subject to any contribution assessments for this reinsurance program. This was not contemplated in the proposed rule and the regulators did not indicate any intention to change course.
“Our meeting today illustrates how important it is for SIIA to continue to directly engage key regulators as ACA rules are developed and finalized,” said SIIA Chief Operating Officer Mike Ferguson. “We expect our dialogue with HHS officials on this subject to continue to ensure that they fully understand and account for how the self-insurance marketplace operates.”
This is a developing story. Please watch for additional updates as developments warrant. Should you have any questions in the meantime, please contact SIIA Government Relations Director Jay Fahrer at 202/463-8161,or via e-mail at jfahrer@siia.org.
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