Qualified Health Plans (“QHPs”) and other stakeholders have until October 27, 2014, to comment on CMS’s proposed cost sharing reduction payment reconciliation reporting process. On Friday, September 26, 2014, CMS released information on the proposed data elements to be collected as part of the cost sharing reduction payment annual reconciliation process.[1] QHPs participating in both federally-facilitated and state-based exchanges will receive advance payments of cost sharing reductions for eligible individuals. Those cost sharing reductions are paid by the QHP issuers to the eligible individuals’ health care providers, to lower the individuals’ out-of-pocket costs, thereby making care more affordable.[2]
To implement the cost sharing reductions required by the Affordable Care Act (“ACA”), QHPs must develop and offer three silver plan variations in addition to their standard silver plan offering. The purpose of the variations is to reflect the impact of the cost sharing reductions at various income levels, allowing individuals to pay an income-appropriate reduced cost sharing amount at the site of service.[3]
Until 2016, QHPs may choose one of two methodologies—standard or simplified—to calculate cost sharing reductions paid and to report this information to CMS in order to reconcile the cost sharing payments made by the QHPs with the amounts advanced by CMS. After 2016, QHPs may only use the standard methodology to calculate cost sharing reductions. Under the standard methodology, the data must identify the amount of cost sharing paid by eligible individuals in each plan variation as compared to the amount these individuals would have paid under the standard plan.[4] The cost sharing paid by the QHP is the difference between those two amounts. The simplified methodology requires QHP issuers to calculate the amount eligible individuals would have paid under the standard plan by applying four cost sharing parameters for the standard plan to the total allowed costs paid for essential health benefits under the cost sharing reduction plan variation.[5] The four cost sharing parameters are the effective deductible, the effective pre-deductible coinsurance rate, the effective post-deductible coinsurance rate, and the effective claims ceiling.
The data elements that QHPs must collect and report for the proposed data template can be accessed at CMS-10526 CMS Recon PRA Data Collection Elements and must be provided regardless of which methodology is used for the reconciliation. CMS states in its response to comments submitted on a prior posting of this information that guidance on the audit process for cost sharing reduction reconciliation will be forthcoming.
As previously noted, public comment on the revised regulations will be accepted through October 27, 2014. Epstein Becker Green is available to assist with the drafting and submission of comments to the CMS.
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ENDNOTES
[1] Agency Information Collection Activities: Submission for OMB Review; Comment Request, Cost Sharing Reduction Reconciliation, 79 FR 57932 (September 26, 2014), http://www.gpo.gov/fdsys/pkg/FR-2014-09-26/pdf/2014-22980.pdf.
[2] Individuals eligible for cost sharing reductions are those with household incomes of between 100 percent and 250 percent of the federal poverty level (FPL) who are enrolled in a silver level QHP in the individual market on a federally-facilitated or state-based exchange. See ACA § 1402(b).
[3] A standard silver level plan is required to have an actuarial value (AV) of 70 percent, meaning that it covers 70 percent of the costs of coverage for a typical group of enrollees. 45 C.F.R. § 156.140. The silver plan variations have corresponding AV levels of: 94 percent for those with incomes between 100 to 150 percent of the federal poverty level (FPL), 87 percent for those with incomes between 150 and 200 percent of FPL, and 73 percent for those with incomes between 200 and 250 percent of FPL. 45 C.F.R. § 155.305; 45 C.F.R. § 156.420.
[4] 45 C,F,R, § 156.430(c)(2).
[5] 45 C.F.R. § 156.400(c)(4).
