Health Reform WK-EDGE Issuers reminded to prepare for cost-sharing reduction reporting
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Friday, January 22, 2016

Issuers reminded to prepare for cost-sharing reduction reporting

By Kayla R. Bryant, J.D.

Issuers offering qualified health plans (QHPs) on the health insurance marketplaces must notify HHS of cost-sharing reductions (CSR) offered to eligible enrollees. CMS reconciles the reduced cost sharing compared with a standard payment plan and provides issuers with advance payments to make up the difference as required by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). CMS and the Center for Consumer Information and Insurance Oversight (CCIIO) have provided draft guidance on submitting the information and selecting a reconciliation methodology, along with technical support documents (CCIIO Draft Manual, January 15, 2016; CSR Reconciliation Specification, January 15, 2016; CSR Attestation Forms; January 15, 2016).

Methodology selection. Two options are available for reconciliation: standard and simplified. The standard methodology allows issuers to submit an enrollee’s complete set of claims to be calculated as if they had been enrolled in a standard plan to determine the total cost sharing reductions provided by the issuer. Under the simplified option, users calculate the estimated cost sharing for standard plans and apply those to a policy’s total allowed essential health benefit (EHB) claims to determine the value of CSRs provided. Issuers must develop two to six estimated cost-sharing parameters based on average claims experiences. The draft manual expands on previous CMS guidance and describes in detail the five steps for the simplified methodology.

CMS provided the simplified option after issuers were concerned that technological limitations would not allow them to re-adjudicate all claims by the deadline. However, the simplified option may only be used if plan subgroups have enough enrollees to make reliable calculations. If not enough enrollees are available, a simplified actuarial value (AV) methodology may be used instead. Issuers that had previously used the simplified methodology may switch to the standard one at any time prior to April 30, 2016.

Reporting requirements. Issuers using all methodologies must provide a summary report with the actual value of CSRs provided for everyone enrolled in each unique policy and must indicate which methodology was used. If an issuer acquired another issuer that used a different methodology at some point during the benefit year, it must reconcile and report CSRs separately. Issuers that merged during a benefit year must calculate separately for that year, but may use either methodology for later benefit years. Issuers must submit attestations showing that CSR amounts represent only EHB cost sharing (which are the only types of services permitted for federal reimbursement for CSRs under section 1303 of the ACA).

Attestations. CMS has provided two technical guidance documents on submitting reconciliation forms to the Multidimensional Insurance Data Analytics System (MIDAS) in a pipe delimited format. Filenames should include trading partner ID, application ID, function code, date, time, environment code, and direction. The issuer summary record must include aggregate amounts of EHB claims, enrollee amounts paid, and the CSR provided. Plan summary and policy detail records must include all QHPs, financial amounts, and methodology. Attestation files must be in Excel document format and be sent together in a zipped file.

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