Risk Corridor Claims By Insurers Far Exceed Contributions (Updated)

Implementing Health Reform. On October 1, 2015, the Centers for Medicare and Medicaid Services announced the total of collections and payouts under the risk corridor premium stabilization program for 2014. CMS announced that insurers have submitted $2.87 billion in risk corridor claims for 2014. Insurers only owe, however, $362 million in risk corridor contributions. Thus payments in 2015 for 2014 will be paid out at 12.6 percent of claims, assuming full collections of contributions owed The Affordable Care Act established three premium stabilization programs: the permanent risk adjustment program, which collects funds from insurers in the individual and small group markets that have enrolled lower-risk enrollees and transfers the funds to insurers that have enrolled higher risk enrollees; the three-year reinsurance program, which collects contributions from all insured and self-insured health plans in individual and group markets and pays out those funds to reinsure high-cost claims in the individual market; and the three-year risk corridor program. The risk corridor program applies only to insurers that offer qualified health plans (QHPs), that is, plans certified through the exchange. It was intended to reduce the risk that insurers faced in setting their premiums in this new and unfamiliar market. It compares each insurer’s “allowable costs”—claims plus other allowable costs—with the insurer’s “target amount”—its premiums minus administrative expenses,...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Featured Following the ACA Insurance and Coverage Medicaid and CHIP Implementing Health Reform reinsurance program risk adjustment program risk corridor program SHOP enrollment Source Type: blogs