The Truven Health Blog

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The 2016 Cost-Sharing Reduction Reconciliation Submission Deadline Has Passed – Are You Ready for Next Year?

Monday, June 5, 2017

Under the Affordable Care Act (ACA), issuers of qualified health plans must offer cost-sharing variations of their plans, to provide options with reduced out-of-pocket expenses to eligible enrollees. The Centers for Medicare & Medicaid Services (CMS) advances funds to insurers monthly during the benefit year to offset these costs, followed by the requisite annual reconciliation.

Now that the June 2nd deadline for submitting 2016 cost-sharing reduction (CSR) reconciliations has passed, it’s important for health plans to evaluate their submission processes and decide whether they’ll need help reconciling subsidies for 2017.

Though it is unclear whether subsidies will continue -- given the uncertainty of healthcare reform and the push to eliminate the program -- America’s Health Insurance Plans (AHIP), the American Medical Association, the American Hospital Association, and a number of other business and healthcare organizations support continuing the program. In fact, several issued a calling for at least a two-year commitment to funding ACA CSR payments, and they want to see the money included in a congressional spending bill. As of this writing, CMS continues to provide CSR payments to health plans, and plans will be required to reconcile payments at the close of the 2017 benefit year.

Why you should start planning now for 2017

The CSR requirements are integral to the affordability of individual plans on the federally facilitated state marketplaces (the Marketplace), and essential for an issuer’s ability to control plan premiums. It’s vital for health plans to ensure that their advanced payments are reconciled accurately.  The law requires that health plans:

  • Utilize the Standard method (re-adjudication of 100 percent of claims) for the 2017 benefit year (as opposed to the earlier Simplified option)
  • Reconcile all advance payments and actual subsidies at the end of the year

In addition to being a complex compliance task, CSR reconciliation also carries much financial risk. According to CMS, more than half of enrollees in plans sold in the Marketplace choose CSR plans,* which means there could be a significant financial impact on health plans if subsidies aren’t reported correctly. Health plans need to reconcile accurately to be assured they receive any additional funds CMS may owe them or to return funds to CMS if their expenses were less than projected.

Health plans: If you struggled with your 2016 submissions or are worried about implementing the now-required Standard method for 2017, it’s time to select a partner for this task. Implementing the more complicated Standard method takes time, and there’s too much money at stake to be anything less than fully prepared and compliant. Contact us today for more information.

Marie Bowker, Senior Client Executive
Bryan Briegel, Healthcare Reform Solutions Strategist

* Centers for Medicare and Medicaid Services, “March 31, 2016 Effectuated Enrollment Snapshot” (CMS, June 30, 2016).