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CMS Boosts Assistance for Marketplace Health Insurers

By Rebecca Adams, CQ Roll Call

June 19, 2015 -- Health insurers who offer plans in health law marketplaces will get more federal assistance for sick, expensive-to-treat patients, the Centers for Medicare and Medicaid Services (CMS) announced last week.

The extra assistance for the 2014 benefit year is available because CMS collected more money from insurers than the federal government expects to send back to the plans.

The 2010 health law provided three types of programs to help protect insurers from unexpected losses and entice them to offer coverage in new marketplace plans. One of those programs, the reinsurance program, gives money to insurers for sick patients with expensive medical bills. The money for the reinsurance program is funded by a tax on health insurance premiums of $63 per person.

CMS is expected to take in about $9.7 billion by Nov. 15, 2015. The next open enrollment period for 2016 is expected to start on Nov. 1, 2015. CMS officials projected that there will be money left over that could be used to cover more of the costs of insurers.

The federal government will use the extra money to pay insurers all of the costs, instead of 80 percent of those costs, within certain guidelines. Currently, the federal government pays 80 percent of expenses in high-cost cases that total $45,000 or more, up to a cap of $250,000.

The reinsurance program, along with another program known as the risk corridors program, drew some criticisms from some congressional Republicans who questioned the additional funds, even though the reinsurance program is essentially funded by insurers. The reinsurance money expires after 2016.

Health insurers applauded last week's announcement.

"This flexibility will ensure health plans can address the needs of enrollees managing multiple chronic conditions while making individual market premiums more affordable for consumers," said America's Health Insurance Plans spokeswoman Clare Krusing.

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