In­sur­ers, states forced to play guess­ing game with 2018 rates

Modern Healthcare - - NEWS - By Vir­gil Dick­son

It’s crunch time for in­sur­ance com­pa­nies and state reg­u­la­tors as they set rates for 2018. Right now, though, they are fly­ing blind. That’s be­cause the fed­eral govern­ment has yet to com­mit to mak­ing pay­ments that help in­sur­ers off­set the cost of pro­vid­ing low-in­come peo­ple with more af­ford­able plan op­tions on Af­ford­able Care Act ex­changes.

“I can’t un­der­score that time is of the essence, and some of our crit­i­cal de­ci­sions may have to oc­cur in a rel­a­tively short pe­riod of time,” An­them CEO Joseph Swedish said on an in­vestors call last week.

An­them sold plans on the mar­ket­place in 14 states this year, but Swedish ques­tioned if that would be sus­tain­able next year with­out the so-called cost-shar­ing re­duc­tion pay­ments. The in­surer has al­ready told reg­u­la­tors it plans to leave or scale back its pres­ence on the mar­ket­places in In­di­ana, Ohio and Wis­con­sin. De­pend­ing on what hap­pens with CSRs, more ex­its could fol­low.

Swedish isn’t alone in hop­ing for clear di­rec­tion from the Trump ad­min­is­tra­tion. Across the na­tion, in­sur­ers and state reg­u­la­tors are play­ing a bit of a guess­ing game, es­pe­cially since the ad­min­is­tra­tion has thus far been mak­ing the CSR pay­ments on a month-by­month ba­sis.

Mod­ern Health­care con­tacted reg­u­la­tors in all 50 states and the Dis­trict of Columbia to see how they are han­dling the un­cer­tainty. In the ab­sence of any as­sur­ances by the fed­eral govern­ment, state com­mis­sion­ers are mak­ing one of three choices:

• Have plans draft two rates with one that as­sumes CSRs and one that does not

• Is­sue no guid­ance at all or have plans file as­sum­ing CSRs will con­tinue

• Have them file rates as­sum­ing CSRs will not con­tinue

Based on re­sponses to Mod­ern Health­care’s in­quiry, 38 states and Wash­ing­ton, D.C., have either told plans to as­sume CSRs or gave no guid­ance at all, let­ting plans choose how to pro­ceed. Seven states have had in­sur­ance com­pa­nies draft two rates and six have com­pa­nies that are fil­ing as­sum­ing no CSRs.

“We’re try­ing to give car­ri­ers some sort of cer­tainty,” said Idaho Depart­ment of In­sur­ance Prod­uct Bu­reau Chief Wes Trexler, which asked car­ri­ers to as­sume CSRs will not con­tinue.

“For those states that have de­cided to as­sume CSRs there is a down­side to that ap­proach,” said Ceci Con­nolly, CEO of the Al­liance of Com­mu­nity Health Plans. She said plans could face sig­nif­i­cant fi­nan­cial losses if the CSRs go away.

If a plan files as­sum­ing no CSRs and that ends up be­ing the case, pre­mi­ums could rise at least 20% from last year, ac­cord­ing to the Kaiser Fam­ily Foun­da­tion.

Such a sce­nario would re­sult in more con­sumers either choos­ing to have no cov­er­age at all or choos­ing a bronze plan, ac­cord­ing to Sean Mullin, a se­nior di­rec­tor at

“Fil­ing two sets of rates in one state is not at all typ­i­cal,” Owen said. “It is not as sim­ple as in­clud­ing or ex­clud­ing an amount for CSR in the rates.” Re­becca Owen Health re­search ac­tu­ary The So­ci­ety of Ac­tu­ar­ies

the health­care con­sult­ing firm Leav­itt Part­ners.

Hav­ing more peo­ple go­ing into high-de­ductible bronze plans would be the worst-case sce­nario for med­i­cal providers. “There will be more peo­ple get­ting pro­ce­dures with­out providers get­ting paid lead­ing to an in­crease in bad debt,” Mullin said.

If in­sur­ance com­pa­nies as­sumed no CSRs and they are paid, they would have to is­sue re­bates to con­sumers since they would have taken in too much money un­der the med­i­cal loss ra­tio guide­lines out­lined in the ACA. This pol­icy dic­tates the amount of mar­gin that can be re­tained af­ter med­i­cal costs are paid.

For the states that have had plans de­velop two rates, ac­tu­ar­ies are faced with the un­prece­dented chal­lenge of mak­ing sure rates are nei­ther too high or too low, ac­cord­ing to Re­becca Owen, health re­search ac­tu­ary for the So­ci­ety of Ac­tu­ar­ies.

“Fil­ing two sets of rates in one state is not at all typ­i­cal,” Owen said. “It is not as sim­ple as in­clud­ing or ex­clud­ing an amount for CSR in the rates.”

Fac­tors that come into play when de­vel­op­ing two rates is pre­dict­ing how con­sumers will re­spond to both prices and how other plans in the mar­ket will re­spond to the con­tin­u­a­tion or end of CSRs. Not all plans re­ceive the same amount of money, so they may choose a lim­ited pre­mium in­crease if the funds van­ish.

For the 38 states now re­ly­ing on Health­Care.gov for their res­i­dents to buy in­sur­ance, there ap­pears to be lim­ited op­por­tu­nity for plans to up­date their rates once they are sub­mit­ted to the CMS, which is only al­low­ing them to sub­mit one rate by the Aug. 16 dead­line. Plans on the fed­eral ex­change will have un­til Sept. 27 to sign a con­tract with the CMS. A trun­cated open-en­roll­ment sea­son runs from Nov. 1 to Dec. 15.

Cur­rently, the fed­eral govern­ment is spend­ing $7 bil­lion a year to lower de­ductibles and co-pays for about 8.4 mil­lion cus­tomers with sil­ver plans, which are the only plans el­i­gi­ble for the funds. The Kaiser Fam­ily Foun­da­tion es­ti­mated that would grow to $10 bil­lion in 2018.

“There is not a lot of run­way from an op­er­a­tions stand­point to be sure rates are ac­tu­ally rolled out in time,” said Hans Leida, an ac­tu­ary at con­sul­tancy Mil­li­man.

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