3 Rs of Health Care Reform

I don’t know about you, but back in my school days, “the three Rs” were reading, writing and ‘rithmetic. But, as correctly stated in a HealthNetPulse article, in our new world of health care reform, the three Rs are “reinsurance, risk corridors and risk-adjustment.”

3 Rs of Health Care Reform

Reinsurance:  “Health and Human Services (HHS) and the states will establish a $25 billion transitional (2014 through 2016) reinsurance program…funded by health insurers and group health plans.”  In other words:  health insurance issuers and self-funded group health plans will be required to make contributions to the state exchanges which will help offset the costs of high-risk individuals that have been blocked from the obtaining insurance until the Exchanges open in October 2013.

Risk corridors:  This provision establishes a  “temporary program to protect against uncertainty in setting rates…payments (are) made between qualified health plans by Health and Human Services (HHS) limit loss or gains. This method is funded through contributions from the plans…similar to the Medicare Part D Program. The aim is to limit risks to plans that are pricing incorrectly…The risk corridor method is intended to be used by qualified health plans that are outside of the exchange but are substantially similar to those offered within the exchange.” (as described by America’s Health Insurance Plans (AHIP) Institute 2012 Conference).

Risk-adjustment program: “HHS or the states will establish a risk-adjustment process…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.”

Health Care Reform

If you have an interest in preparing for the upcoming changes, I hope you will review our previous blog posts on health care reform and stay tuned here for further updates as HHS and the states finalize guidelines and processes.

Although this post has more jargon that we typically post, we thought the content was important to share with you.  If you have any questions or comments about this post or health care reform in general, please do share them in the comments section below, on our facebook page, or more privately by using the form below.

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