Aug 17 -- The Centers for Medicare & Medicaid Services (CMS) invites comments to OMB by Octobe 2, 2023 regarding ACA Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment (CMS-10401). [Comments due 30 days after submission to OMB on September 1.]
The data collection and reporting requirements will be used by HHS to run the permanent risk adjustment program, including validation of data submitted by issuers, on behalf of States that requested HHS to run it for them. Risk adjustment is one of three market stability programs established by the Patient Protection and Affordable Care Act and is intended to mitigate the impact of adverse selection in the individual and small group health insurance markets inside and outside of the Health Insurance Exchanges. HHS will also use this data to adjust the payment transfer formula for risk associated with high-cost enrollees. Issuers and providers can use the alternative reporting requirements for mental and behavioral health records described herein to comply with State privacy laws.
The Patient Protection and Affordable Care Act, Public Law 111-148, enacted on March 23, 2010, and the Health Care and Education Reconciliation Act, Public Law 111-152, enacted on March 30, 2010 [collectively, the “Patient Protection and Affordable Care Act” (ACA)], provided for three premium stabilization programs – a transitional reinsurance program, a temporary risk corridors program, and a permanent risk adjustment program (the 3Rs programs) – to mitigate the negative impacts of adverse selection and market uncertainty. This document focuses on the data collection requirements related to the 3Rs programs.
1. Transitional Reinsurance Program -- Established by Section 1341 of the ACA, the transitional reinsurance program was applicable for the 2014–2016 benefit years. Currently, close-out activities continue for this program, and are expected to continue into 2023 or beyond, as required.
2. Temporary Risk Corridors Program -- Established by Section 1342 of the ACA, the temporary risk corridors program was applicable for the 2014–2016 benefit years. No close-out activities remain for the risk corridors program.
3. Permanent Risk Adjustment Program -- Established by Section 1343 of the ACA, the permanent risk adjustment program transfers funds from lower risk, non-grandfathered plans to higher risk, non-grandfathered plans in the individual and small group markets, inside and outside the Exchanges. Some notable changes to the risk adjustment program are as follows:
-- EDGE Data Collection
In the HHS Notice of Benefit and Payment Parameters for 2023 final rule (“2023 Payment Notice,” 87 FR 27208), we finalized the EDGE data extraction and collection requirements to include five new data elements for collection: 1) ZIP code, 2) Race, 3) Ethnicity, 4) Subsidy Indicator, 5) Individual Coverage Health Reimbursement (ICHRA) Indicator as well as the collection of extracted HIOS ID and rating area data elements (87 FR 27208 at 27241). In the HHS Notice of Benefit and Payment Parameters for 2024 final rule (“2024 Payment Notice,” 88 FR 25740), we added a sixth new EDGE data element for collection: Qualified Small Employee Health Reimbursement Arrangement (QSEHRA) Indicator (88 FR 25781).
- High-Cost Risk Pool
In the 2023 Payment Notice (87 FR 27208 at 27253), we finalized that whenever HHS recoups high-cost risk pool funds as a result of audits of risk adjustment covered plans, actionable discrepancies, or successful appeals, the recouped funds will be used to reduce high-cost risk pool charges for that national high-cost risk pool for the next applicable benefit year for which high-cost risk pool payments have not already been calculated.
- Risk Adjustment Transfers Reduction
In the 2023 Payment Notice (87 FR 27208 at 27236), HHS repealed the ability of states to request a reduction in risk adjustment state transfers starting with the 2024 benefit year, with an exception for prior participants until the 2025 benefit year. In the 2024 Payment Notice (88 FR 25740 at 25776), HHS repealed the ability of prior participants to request a reduction in risk adjustment state transfers starting with the 2025 benefit year.
- Risk Adjustment Data Validation
In the 2023 Payment Notice (87 FR 27208 at 27253), HHS finalized refinements to the HHS–RADV error estimation methodology beginning with the 2021 benefit year to: (1) Extend the application of Super hierarchical condition categories (HCCs) from their application only in the sorting step that assigns HCCs to failure rate groups to broader application throughout the HHS–RADV error rate calculation process; (2) specify that Super HCCs will be defined separately according to the age group model to which an enrollee is subject, except when the child and adult coefficient estimation groups have identical definitions; and (3) constrain to zero any failure rate group outlier with a negative failure rate, regardless of whether the outlier issuer has a negative or positive error rate. In the 2024 Payment Notice (88 FR 25740 at 25788), HHS finalized the revision of the materiality threshold for random and targeted sampling beginning with the 2022 benefit year, changing the materiality threshold from $15 million in total annual statewide premiums to 30,000 total statewide billable member months (BMM). In the 2024 Payment Notice, HHS also finalized the repeal the exemption of exiting issuers from adjustments to risk scores and risk adjustment transfers in cases where the exiting issuer was a negative error rate outlier, beginning with 2021 benefit year HHSRADV.
EDGE Data Collection
The transitional reinsurance program (for determining payments) and permanent risk adjustment (including the high-cost risk pool) program utilize the same data collection tool. For both programs, HHS collects issuers’ data needed for program calculations via a distributed data collection (DDC) approach referred to as the EDGE server.
The reporting and data collection provisions described below apply to states and health plans both inside and outside of an Exchange because “risk adjustment covered plan” is defined at 45 CFR § 153.20 as “for the purpose of the risk adjustment program, any health insurance coverage offered in the individual or small group market with the exception of grandfathered health plans, group health insurance coverage described in § 146.145(b) of this subchapter, individual health insurance coverage described in § 148.220 of this subchapter, and any plan determined not to be a risk adjustment covered plan in the applicable Federally certified risk adjustment methodology” and a “reinsurance-eligible plan” is defined at 45 CFR § 153.20 as “for the purpose of the reinsurance program, any health insurance coverage offered in the individual market, except for grandfathered plans and health insurance coverage not required to submit reinsurance contributions under §153.400(a).”
HHS continues to recalibrate the risk adjustment models and refine the HHS-developed risk adjustment methodology to improve the risk adjustment program. This supporting statement proposes to revise existing estimates based on the new data elements in six (6) areas: 1) ZIP code, 2) race, 3) ethnicity, 4) subsidy indicator, 5) ICHRA indicator, and 6) QSEHRA indicator to conform to statute and regulations.
ACA Premium Stabilization Programs:
https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs
CMS Information Collection Request:
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202308-0938-015 Click View Supporting Statement for technical documentation. Submit comments through this webpage.
FRN:
https://www.federalregister.gov/d/2023-17731 item #1
For AEA members wishing to submit comments, "A Primer on How to Respond to Calls for Comment on Federal Data Collections" is available at
https://www.aeaweb.org/content/file?id=5806