Managers of the public health insurance exchange programs are trying to lock in menus and rates for the 2016 open enrollment period, which is set to start Nov. 1 and is supposed to run until Jan. 31, 2016.
Analysts say the 2016 plan information they can get now suggests the menus will look good, both on and off the Patient Protection and Affordable Care Act (PPACA) exchange shelves.
But regulators, exchange managers and insurers have a problem: They're creating the 2016 plan menus and setting the 2016 plan prices without having a clear idea of how the individual PPACA-compliant health insurance products in effect during 2014 did, let alone how the products in force for 2015 are doing this year.
The financial sustainability of individual health insurance products is unclear because officials at the Center for Consumer Information and Insurance Oversight (CCIIO), the arm of the U.S. Department of Health and Human Services (HHS) in charge of PPACA commercial health insurance programs, is still determining what health insurers will have to pay into, and get out of, the PPACA "three R's" risk-management programs.
Keeping track of how each of the three programs work is complicated, but, for agents, brokers and clients, the effects of severe, unexpected problems with the temporary PPACA reinsurance program, the temporary PPACA risk corridors program and the permanent PPACA risk-adjustment program could be painfully clear: health insurance plan options could suddenly vanish from the shelves.
Insurers might have to suspend marketing of some or all of their plans, or even suspend operations.
Will three R's surprises lead to health insurer pneumonia, or just yet another over-hyped case of the PPACA hiccups?
For a three R's refresher, and three quick peeks at what PPACA watchers, federal agencies and insurer rate filings have been saying about the three R's lately, read on.
Three R's primer
PPACA blocked health insurers from using personal health information in decisions about issuing coverage starting in January 2014, and it also stopped health insurers from using personal health information other than age, location and, in some states, tobacco, when pricing individual health coverage.
To keep the underwriting rules from swamping health insurers with unexpected claims, or giving insurers incentives to send sick applicants elsewhere, PPACA drafters created the three R's.
Kidneys help the body by evening out levels of salt and other substances in the bloodstream. The three R's are meant to perform a comparable function for the PPACA-regulated commercial health insurance system, by evening out the levels of claim risk flowing through the market.
The reinsurance program is supposed to use revenue from a broad-based fee collection effort protect individual health insurers against covering enrollees with catastrophic claims in 2014, 2015 and 2016.
The risk-adjustment program is supposed to be a permanent program that will use cash from insurers with enrollees with relatively low risk scores to help the insurers with high risk scores.
The risk corridors program is supposed to use cash from exchange plan issuers with good operating results for 2014, 2015 and 2016 to help exchange plan issuers that have poor results in those years. To calculate the risk corridors program cash transfer amounts, program managers need to know what the PPACA reinsurance payments and PPACA risk-adjustment program cash transfers will be.
CCIIO reported earlier this year that it took in more than enough fee revenue to meet 2014 reinsurance program obligations.
But the agency says insurers filed conflicting reports for the 2014 reinsurance and 2014 risk-adjustment programs.
Because of obvious errors and data conflicts, the agency has ordered many health insurers to recheck their filings and explain what CCIIO reviewers believe to be errors and conflicts.
What the three R's trackers say
Officials at CCIIO and at CCIIO's parent agency, the Centers for Medicare & Medicaid Services (CMS), have been notoriously quiet about the three R's programs.
Analysts at the U.S. Government Accountability Office (GAO) reported in May that some insurers said CCIIO officials had stopped answering any questions about the three R's during the first PPACA open enrollment period — from October 2013 through early 2014.
CCIIO and CMS apparently needed to focus all of the resources they could muster on getting the HealthCare.gov federal exchange enrollment system and the state-based exchange enrollment systems up and running, but insurers told GAO investigators the agencies' lack of guidance slowed insurers' efforts to understand and comply with the three R's reporting requirements.
The officials' questions also raised questions about whether the agency officials themselves understood how the three R's would work.
PPACA drafters tried to base the risk-adjustment program, for example, on the Medicare Advantage risk-adjustment program, which has been in operation since 2007.
One big difference is that the Medicare Advantage risk-adjustment program is set up in such a way that plan issuers wrestle over enrollee risk assessments only with Medicare program managers, not with other insurers.
Aaron Vandervelde, a consultant at Berkeley Research Group who has helped clients understand and participate in the Medicare and PPACA risk-adjustment programs, noted in an interview that even the Medicare Advantage risk-adjustment risk assessment program is still evolving.
"The implementation of risk adjustment is very different in the exchanges," Vandervelde said.
But Vandervelde said he believes the CMS staff has the technical ability to run and improve both the Medicare risk-adjustment program and the PPACA risk-adjustment program.
