GHC - ACA Research Study Exam 2024.

(224) Premium stabilization programs in the ACA (GHC-806-15 p3) - correct answer These are also referred to as the three Rs 1) Risk adjustment - permanent program that began in 2014 a) Designed to allow a health insurer to price products without factoring in the health status of the individuals purchasing these products b) Insurers whose pools have lower-than-average risk scores will transfer funds to those whose pools have higher-than-average risk scores c) Applies to individual and small group products 2) Reinsurance - will be in effect from a) Applies to individual insurance only b) Is funded by assessment paid by commercial insurers and self-funded plans c) The 2014 benefit will be 80% of claims between $60,000 and $250,000 for a given individual 3) Risk corridor - will be in effect from a) Designed to provide some protection against variability in claims costs b) Applies to individual and small group products c) The insurer pays HHS if actual experience is more than 3% below the target amount. And HHS pays the insurer if actual experience is more than 3% above the target d) The payment amount is 50% of the amount between +/- 3% of the target and +/- 8% of the target, and 80% of the amount that is +/- 8% of the target e) The calculation is done after accounting for amounts transferred as a result of the risk adjustment and reinsurance programs (225) Differences between the ACA and Medicare Advantage risk-adjustment programs (GHC-806-15 p4) - correct answer 1) ACA risk adjustment uses a concurrent model (current year data is used to develop risk scores). But Medicare Advantage risk adjustment is based on a retrospective model (prior year data is used instead), which makes risk scores far more predictable as of the financial reporting date 2) Medicare Advantage risk adjustment is performed as a single national program, which makes it much simpler than the ACA approach, which is by state, market, and risk pool 3) Medicare Advantage plans have relatively stable membership. Individual and small group plans will be far less stable, which will make it harder to estimate risk-adjustment amounts 4) The payment process used for medicare Advantage risk adjustment allows insurers to develop relatively accurate estimates of their ultimate settlement amounts (226) Elements of ACA risk adjustment that may lead to uncertainty in an insurer's financial statements (GHC-805-15 p5) - correct answer 1) Uncertainty as to the insurer's risk score - because risk adjustment is based on concurrent analysis, the insurer will not have complete data by year end for calculating its risk score 2) Uncertainty as to other insurers' risk scores - the insurer's payment will depend on its risk score relative to others in the market, so the insurer will need to estimate the average risk score of other insurers 3) Uncertainty as to member exposure - determining year end membership is difficult because the ACA requires insurers to use a 90-day premium grace period provision for any member receiving a premium subsidy 4) Granularity of the calculation - ACA risk adjustment requires insurers to do a separate calculation for various risk adjustment cells, which complicates the modeling required to estimate risk adjustment balances 5) Implications of data reviews - data validation reviews could lead to payment adjustments if data is later found to contain errors (227) Aspects of the ACA reinsurance program that can increase uncertainty in financial statements (GHC-805-15 p8) - correct answer 1) Health insurance providers fee - a new non-deductible excise tax assessed to insurers based on prior year market share of premiums in eligible lines of business (insured major medical, dental/vision, Medicare Advantage, Medicare Part D, and Medicaid). Companies not subject to federal income tax only count one-half of their premiums. Ammount assessed will be $8.0 billion in 2014, $11.3 billion in both 2015 and 2016, and increasing thereafter 2) Reinsurance contribution - the ACA reinsurance benefits will be funded by this assessment charged to health insurers and sponsors of self-funded health plans. Contribution rate was $5.25 PMPM in 2014 3) Patient Centered Outcomes Research Institute fee - for plan years ending between October 2012 and September 2019. Was $PMPY for the first plan year, $2 PMPY for the second year, and indexed for inflation in future years 4) Risk adjustment user fee - applies to issuers of plans to which the ACA risk-adjustment program applies. Was $0.96 PMPY in 2014 5) Federally-facilitated exchange user fee - applies to issuers of plans offered through a federally-facilitated exchange. Was 3.5% of premium in 2014 6) Excise tax for high-cost health plans (beginning in 2018) 7) Limitations to tax-favored allowanc