Manatt's Michael Kolber, an associate in the firm's Healthcare practice, was quoted by Health Exchange Alert on the Department of Health and Human Services' (HHS') proposal to still pay insurers sequestered ACA risk adjustment and reinsurance funding.
As reported by Health Exchange Alert, the proposed funding would increase the federal deficit by roughly $6 billion over 10 years. HHS says in its proposed rule that sequestered fiscal year 2015 risk adjustment and reinsurance funding would be paid to insurers the following fiscal year without further action from Congress. Reinsurance is only in place for three years to help stabilize premiums in the initial years of the exchanges. But risk adjustment is permanent, and currently HHS is operating that program in all states except for Massachusetts.
Kolber told Health Exchange Alert that HHS and the Office of Management and Budget (OMB) seem to have concluded that risk adjustment and reinsurance are revolving funds, which solves two problems that could have posed major issues for insurers. The proposed rule assuages insurers' concerns about what sequestered risk adjustment and reinsurance payments would mean for their bottom lines, because HHS' stance means the sequester only impacts the timing of the payments rather than the total amount. And, because risk adjustment and reinsurance consist of revolving accounts, this should mean that HHS doesn't need a congressional appropriation in order to make those payments to plans, he adds.
"There were some concerns that the ACA authorized, but did not appropriate, risk adjustment and reinsurance payments. If HHS needed to go to Congress to get an annual appropriation to make these payments, this would have introduced another pinch point for Republicans to use to stymie ACA implementation," Kolber said.