Back in the day, the three Rs were reading, writing and arithmetic. In the world of health care reform, they are reinsurance, risk corridors and risk-adjustment.
The “3Rs,” as they are commonly known, are provisions scheduled for 2014 that concern pooling and risk-sharing. These provisions are intended to remove health status from premium calculations, so that neither individuals nor employer groups who have sick employees are rate-disadvantaged. Here’s what you need to know.
Reinsurance program. Health and Human Services (HHS) and the states will establish a $25 billion transitional (2014 through 2016) reinsurance program for the Individual market. The program is being funded by health insurers and group health plans.
Risk corridors. This provision establishes a risk corridor program for “Qualified Health Plans (QHPs)” in the Individual or Small Group market (2014 through 2016) based on the plan’s ratio of allowable costs to a target amount (modeled on the risk corridors under Medicare Part D for regional PPOs).
Risk-adjustment program. HHS or the states will establish a risk-adjustment process for the Individual and Small Group markets within that state that assesses a charge on issuers whose actuarial risk for a year is less than the average, and pays issuers whose actuarial risk for a year is greater than the average.
We will continue to keep you updated as HHS and the states finalize guidelines and process.
- Health Net awards $1.5 million to help close insurance gap, improve quality of care and enhance health outcomes
- Oregon/Washington: Eclipsed by health care changes? See Health Net’s 2018 vision
- Medical Loss Ratio (MLR) Process Underway at Health Net
- Preview 2017: California Individual & Family Open Enrollment
- 2016 Affordable Care Act (ACA) Large Group Updates: What You Need to Know