Agenda. Southeast Exchange. Association of Insurance Compliance Professionals Affordable Care Act and Other Hot Topics 6/13/2014

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1 Association of Insurance Compliance Professionals Affordable Care Act and Other Hot Topics June 13, 2014 Trey Sivley, Esq. Georgia Department of Insurance Bob Williams Mississippi Department of Insurance Jennifer Haskell, MBA, CPM, CFE Alabama Department of Insurance Tina Brown South Carolina Department of Insurance Agenda I. ACA a. State Specific Context b. Federal Delays c. Narrow Networks d. SHOP Exchange e. Private Exchanges f. The Future of the Employer Mandate g. 90 day Grace Period (denial of provider claims for medical services rendered from day 31 90). h. Uniform Modification of 2015 QHPs i. Risk Corridor Program (aka Insurer Bailout) j. Accounting Treatment of ACA Fees and Market Stabilization Programs k. The Latest Regarding Legal Challenges to ACA II. PBR and the use of SPVS and Captives for XXX/AXXX Reserves a. Implementation Status (13 states representing 13.8% of market premium (i.e., combined life insurance premium) have adopted PBR) b. VM 20 and the valuation impasse c. Rector Report d. Use and types of SPVs and Captives III. Escheatment and the use of the Deathmaster List a. Is the Deathmaster list appropriate? Necessary? b. NCOIL Model Law and recent legislative actions IV. The FIO Report and the Future of State Based Insurance Regulation a. Credit for Reinsurance (i.e., certified reinsurers) b. NARAB II c. Use of Captives d. Non uniformity of capital standards for certain risk entities e. NIMA/SLIMPACT f. Non uniformity of Guarantee Funds/Insolvency Pools Southeast Exchange Location Marketplace Type Total Number of Individuals Determined Eligible to Enroll in a Marketplace Plan Number of Individuals Eligible to Enroll in a Marketplace Plan with Financial Assistance Determined or Assessed Eligible for Medicaid/CHIP by the Marketplace Number of Individuals Who Have Selected a Marketplace Plan Data as of Alabama Federally facilitated 195, ,059 22,564 97,870 4/19/2014 Florida Federally facilitated 1,603,575 1,114, , ,775 4/19/2014 Georgia Federally facilitated 572, ,925 91, ,543 4/19/2014 Louisiana Federally facilitated 184, ,337 14, ,778 4/19/2014 Mississippi Federally facilitated 117,518 72,219 13,779 61,494 4/19/2014 South Carolina Federally facilitated 213, ,969 28, ,324 4/19/2014 1

2 Federal Delays 1. 1/1/15 Cap on Out of Pocket Limit for insurers that use more than one company to administer benefits 2. 1/1/15 Employer Mandate for All Employers 3. 1/1/16 Employer Mandate for Employers of Employees 4. Grandmothered Plan part I Renew non ACA compliant plans as late as 10/1/14 5. Grandmothered Plan part II Renew non ACA compliant plans as late as 10/1/15 (effectively ACA delay until 10/2016) Network Adequacy 1. QHP Networks versus Traditional Networks 2. Applicable Standards 3. Use of Independent Accreditation Organizations (e.g., URAQ, NCQA, etc.) 4. Provider Refusal to Enter Managed Care Plans (i.e., anesthesiologist, pathologist, radiologist, ER physician, etc.) 5. Current or Proposed Regulatory Activities SHOP Exchange 1. Employer v. Employee Choice for the 32 FF SHOP Commissioner Elections for 2015 Plan Year A. Employer Choice (18) Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota and West Virginia B. Employee Choice / Default (14) Arkansas, Florida, Georgia, Indiana, Iowa, Missouri, Nebraska, North Dakota, Ohio, Tennessee, Texas, Virginia, Wisconsin, and Wyoming 2. Premium Spiral / Adverse Selection 3. Self funding / Stop Loss 2

3 SHOP Exchange 1. Employer v. Employee Choice A. State Commissioner Election for 2015 Plan Year 2. Premium Spiral / Adverse Selection 3. Self funding / Stop Loss Private Exchange 1. Employee Choice A. Typical Structure Each participating insurer issues a group policy to the employer. 2. More Flexible than SHOP Can Include Voluntary Benefits and Large Groups 3. Anti Competitive? Employer Mandate 1. What is the Future? A. Full repeal or modification. 2. Will the Definition of Full Time Employee Change? 1. Currently legislation would increase from 30 to 40 hours 3. Certify It Act of 2014 Legislation that provides for a one year delay of the employer mandate if CMS actuary determines that the ACA has caused net job losses in the small employer market. 3

4 Shifting Burden to Providers 90 day Grace Period 1. Grace Period The ACA Requires Insurers to Give Policyholders Who Receive Premium Subsidies and Paid Their First Month Premium 90 days Notice Prior to Termination For Failure to Pay Premium. 2. Pending Claims The ACA Allows Insurers to Pend Provider Claim for Medical Services Render During Day of the Grace Period. 3. Denied Claims The ACA Allows Insurers to Deny Any Pended Claims Where the Policyholder Does Not Pay All Premium Arrearages. Market Stabilization Programs Program: Reinsurance Risk Corridors Risk Adjustment What: Provides funding to issuers that incur high Limits issuer losses and gains Transfers funds from lower risk plans to claims costs higher risk plans Participants: All issuers and third party administrators on QHPs in the individual and small group market Non grandfathered individual and small behalf of group health group market plans, plans contribute inside and outside the funding; nongrandfathered Exchange individual market plans (inside and outside the Exchange) are eligible for payments Time Period: 3 years ( ) 3 years ( ) Permanent Financial Solvency and Reporting 1. Risk Corridor This Program is Designed to Pick up Mis Pricing, Which Was Exaggerated by the Policy Decision to Create Grandmothered Plans. 2. Accruing Liabilities Timing of the Recognition of ACA Liabilities Such as the Reinsurance or ACA Fee. 3. Accruing Receivables Timing of the Recognition of ACA Receivables Such as Risk Adjustment, Risk Corridor, or Reinsurance Receivables. 4

5 Legal Challenges Sissel v. HHS et al., No (DC Circuit, 2014) (LINK) Case involves the origination clause of the constitution which requires all revenue bills to originate in the U.S. House. The ACA bill, H.R. 3590, started out as the Service Members House Ownership Tax Act of The original H.R was deleted and replaced with the current ACA. Halbig v. Sebelius, Pruitt v. Sebelius, and Indiana v. IRS, all involve challenges to the federal government s authority to pay subsidies for federally run exchanges. The text of the ACA allows the payment of subsidies for Premium Subsidies for purchases through an exchange run by the State. Cutler v. HHS, 1:2013cv02066 (2013). First amendment freedom of religion challenge that the governments religious exemption violates the first amendment because the federal government by accepting some and rejecting other exemption requests is effectively favoring one religion over another. Hobby Lobby v. Sebilius, (2013). Whether the Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. 2000bb et seq., which provides that the government shall not substantially burden a person s exercise of religion unless that burden is the least restrictive means to further a compelling governmental interest, allows a for profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation s owners. Principle Based Reserves and the use of SPVS and Captives for XXX/AXXX Reserves Implementation Status (13 states representing 13.8% of market premium (i.e., combined life insurance premium) have adopted PBR) VM 20 and the valuation impasse Rector Report Use and types of SPVs and Captives Escheatment and the use of the Deathmaster List 1. Do You Agree With the Theory of Escheatment; namely, Does an Insurer Have an Implied Duty to Investigate to Discover Potentially Unfiled Death Claims? Does Your Answer Change if There is a Cutoff of Annuity Payments Based Upon an Investigation? 2. Is the Use of the Deathmaster list appropriate? Necessary? 3. NCOIL Model Law and recent legislative actions 5

6 The FIO Report and the Future of State Based Insurance Regulation 1. Credit for Reinsurance (i.e., certified reinsurers) 2. NARAB II 3. Use of Captives 4. Non uniformity of capital standards for certain risk entities 5. NIMA/SLIMPACT 6. Non uniformity of Guarantee Funds/Insolvency Pools Questions Trey Sivley, Esq. Georgia Department of Insurance Bob Williams Mississippi Department of Insurance Jennifer Haskell, MBA, CPM, CFE Alabama Department of Insurance Tina Brown South Carolina Department of Insurance 6