Comments on Proposed Rule: Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment

Mark B. McClellan

The Engelberg Center for Health Care Reform submitted comments to the Centers for Medicare & Medicaid Services (CMS)  on the  Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment Notice of Proposed Rulemaking (NPRM).

The Patient Protection and Affordable Care Act (PPACA) granted new authorities to states to simultaneously improve health care quality and bend the cost curve. Chief among them is the authority to establish health insurance exchanges, which are intended to function as marketplaces where health plans can compete for consumers on the basis of price and quality.

Effective risk adjustment is important for insurance markets to function well, particularly for higher-risk individuals, and the proposed rule represents an important opportunity to make the operation of those Exchanges actuarially safe for insurance issuers and efficient for consumers.  However, in order to be effective, the practical realities of aggregating increasingly detailed individual health care data and allowing for the flexibility required in the diverse environment that exchanges will be initiated in must be taken into consideration.

To this end, the Engelberg Center recommends that CMS provide states with the flexibility to determine which approach might work best for them. These recommendations were informed by the Engelberg Center’s work on the Quality Alliance Steering Committee, a collaborative effort that makes consistent and useful information about the quality and cost of health care widely available; interactions with the Food and Drug Administration’s Sentinel Initiative; and its work advising the Department of Health and Human Services’ Multipayer Claims Database project. In addition to its work in these areas, ECHCR’s work with the “Beacon” communities has demonstrated that both centralized and decentralized approaches can co‐exist.

Read the full comments on the Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment NPRM