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AHIP sees insurer user fee boosting coverage costs


By Jessica Zigmond
Posted: November 30, 2012 - 2:45 pm ET
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The nation’s health plans cautioned Friday that a proposal from the CMS to charge a monthly user fee to insurers offering plans through a federally operated exchange starting in 2014 will result in rising healthcare coverage costs.

That warning came not long after the CMS issued a proposed rule on insurance provisions in the health reform law, including one that gave HHS the authority to assess and collect user fees from issuers that offer plans through a federally facilitated health insurance exchange to help the federal government support operation costs. That fee could end up applying to plans in many states throughout the country, as just 17 states and Washington, D.C., have said they will run a state-based exchange, according to the Kaiser Family Foundation.

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In 2014, HHS proposes that plans pay the federal government a monthly user fee equal to 3.5% of the plan’s monthly premium. The regulatory filing also noted that the department wants to align the fee with rates charged by state-based exchanges and could adjust the rate in a final notice. But health plans say any fee will result in higher health insurance costs.

“It is important to keep in mind that any new fees to pay for the administration of exchanges will add to the cost of coverage, and that is why the focus needs to be on reducing administrative costs, streamlining operations and avoiding regulatory duplication that will add complexity and increase costs.” Robert Zirkelbach, spokesman for America’s Health Insurance Plans, said in an e-mail.

The department referred to its regulatory filing Friday as a proposed rule meant to provide additional information on two final rules HHS released earlier this year. Nearly 400 pages long, the guidance outlined payment parameters for the risk-adjustment program, the traditional reinsurance program and the temporary risk corridors program, three programs the Patient Protection and Affordable Care Act created to stabilize premiums in the health insurance market.

It also recommended changing the calculation of the medical loss ratio—which requires health plans to spend at least 80% of premium dollars on medical costs—starting in 2014 to account for those three premium-stabilization programs, which HHS had not outlined in previous rules. As a result of that change, HHS has proposed pushing back the MLR reporting deadline to July 31 from its current June 1 deadline and the MLR rebate deadline to Sept. 30 from Aug. 1. Those changes would also take effect in 2014.

HHS will accept comments on the guidance for the next 30 days.


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