By Kerry Young, CQ Roll Call
September 9, 2015 - An emergency request for information needed to operate a risk-management program for insurers will take longer to complete than federal officials expect, insurance industry officials say.
The Centers for Medicare and Medicaid Services (CMS) delayed a planned August release of estimated payments and charges through the so-called risk corridor program to address a "significant number of discrepancies" in data submitted to the agency by insurers. The program, which was created in the Affordable Care Act, caps profits and blunts losses for insurers that offer plans through new marketplaces.
CMS also had questions about insurers' information regarding the so-called medical loss ratio, which requires insurers to spend set amounts of premiums on health expenses. Plans that don't meet those thresholds owe refunds to customers. CMS estimated that 250 organizations would have to submit additional information to clear up these questions, requiring about 2,040 hours combined for these firms and groups.
That estimate "substantially understated" how long it would take to complete worksheets that CMS is using to address questions, said America's Health Insurance Plans and the Blue Cross and Blue Shield Association in a joint comment to CMS on the agency's Aug. 31 filing about its emergency plan to collect more data.
In a separate comment, the insurance company Kaiser Permanente challenged the CMS estimate of roughly 8.13 hours of work for each insurer. Instead, it would take 600 to 800 hours, with five employees working full time for two weeks and another five devoted part time to the task, according to Kaiser.
"Even with these resources, we do not believe we are able to complete the detailed allocations within the allotted time frame," wrote Anthony Barrueta, senior vice president of government relations for Kaiser Permanente, which serves more than 10 million Americans. "We will submit the information we have available by the September 14 deadline and continue performing reconciliations beyond the submission date."
The risk corridor program has been a source of continuing controversy about the implementation of the 2010 health law. The three-year program was designed to aid insurers because the new law allowed people in poor health, many of whom are expensive to cover, to gain coverage without consideration of their medical conditions. Insurers with costs above a certain target will get federal subsidies, while those with profits above a limit will pay the government.
Many Republicans, including GOP presidential contender Sen. Marco Rubio, R-Fla., consider this a potential bailout for the insurance industry. Rubio's first piece of legislation for the 114th session was a bill (S 123) to end the risk corridor program, according to his office. He's so far drawn 11 GOP cosponsors, while more than 20 Republicans back the companion House bill from Rep. Andy Harris, R-Md.
Another GOP duo is taking a different approach to curbing potential payments to insurers. Bills (S 359, HR 724) from Sen. Bill Cassidy of Louisiana and Rep. Leonard Lance of New Jersey seek to insure that payments from the program are made from money collected within the insurance industry and not from taxpayer funds.
Cassidy and Lance claimed a victory last year when appropriators included language blocking transfers of federal funds for the risk corridor program in the fiscal 2015 spending package (PL 113-235).
It's unclear how CMS will respond if the demand for payments through the risk corridor program exceeds what's available through collections, said Scott E. Harrington, a professor at the Wharton School who studies in the insurance industry.
"There's some expectation that the numbers for risk corridors could be pretty poor, according to the CMS perspective, in that the amount of money that is owed could be quite large relative to the collections under this program," Harrington said in a Tuesday interview.