On March 1st, 2013, the federal government issued a final rule on the HHS Notice of Benefit and Payment Parameters. Here's a quick overview of the new rules.
The HHS Notice of Benefit and Payment Parameters final rule expands upon the standards set forth in earlier rules and provides further information on the following topics:
Permanent risk adjustment,
Transitional reinsurance program,
Temporary risk corridors program,
Advance payments of the premium tax credit and cost-sharing reductions,
Small Business Health Options Program (SHOP), and
Medical Loss Ratios (MLRs).
1. Permanent risk adjustment
The permanent risk adjustment program will assist health insurance plans that provide coverage to individuals with higher risk populations, such as those with chronic conditions, and will reduce the incentives for issuers to avoid enrolling only healthy individuals.
States that are running a Health Insurance Marketplace and their own risk adjustment program can propose their own methodology for risk adjustment. HHS is finalizing the risk adjustment methodology the agency will operate when a state chooses not to run its own. The final rule also provides a framework for the agency's approach to validating risk adjustment data.
2. Transitional reinsurance program
The transitional reinsurance program is a three-year program designed to reduce premiums and ensure market stability by helping issuers cover the costs of high-risk enrollees in the individual market.
The statute sets a fixed contribution amount for the reinsurance program. To improve efficiency and reduce administrative burden, the final rule finalizes uniform reinsurance payment parameters for this program and provided States the flexibility to supplement these payment parameters with additional contributions.
3. Temporary risk corridors program
The temporary risk corridors program is designed to protect against uncertainty in rate setting for qualified health plans by limiting the extent of issuer losses and gains.
The final rule finalizes additional technical details on how issuers will account for profits and taxes in their risk corridors calculations, which align this program with the medical loss ratio program.
4. Advance payments of the premium tax credit and cost-sharing reductions
To help eligible individuals pay their premiums and make coverage purchased through a Health Insurance Marketplace affordable for low- and middle-income consumers, 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.
5. Small Business Health Options Program (SHOP)
HHS is finalizing a number of provisions to provide qualified health plan options for small businesses.
These provisions help to ensure a competitive market in the small business health options program (SHOP). Separately, HHS published 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.
6. Medical Loss Ratios (MLRs)
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.