Reform Alert - News from the Blues' Office of National Health Reform

HHS announces applicable user fees

May 6, 2013

The user fee sections of the Notice of Benefit and Payment Parameters for 2014 final rule were issued on March 1, 2013.

Marketplace User Fee
This final rule establishes a Marketplace User Fee that issuers participating in a federally facilitated Marketplace, including partnership models such as Michigan, must pay. This fee will be calculated as a percentage of the qualified health plan (QHP) premium. In 2014, the rate will be 3.5 percent of the QHP’s premium. In a state-based Marketplace, states have input regarding the amount and structure of any user fee charged.

The Department of Health and Human Services (HHS) requires issuers to pool all user fee costs across their applicable market in a state to help prevent adverse selection on the Marketplace. This means that, while the fee will be calculated based only on Marketplace enrollment, the cost is applied to plans on and off the Marketplace. HHS anticipates deducting the user fee from Marketplace-related program payments. If an issuer does not receive any Marketplace-related program payments, the issuer would be invoiced for the user fee. For BCBSM and BCN the impacted segments are Individual and Small group markets.

Risk Adjustment User Fees
If a state does not operate its own risk adjustment program, HHS will operate one on the state’s behalf and collect a user fee to support the administration of HHS-operated risk adjustment. This is a permanent program that will subsidize issuers who insure more members who are likely to have high-claim costs.

This final rule also establishes the risk adjustment user fee assessment and collection approach. The calculation is based on the number of enrollees in the risk adjustment covered plan, on and off the Marketplace, multiplied by the per capita user fee rate. In 2014, the rate will be $0.08 per member per month.

Although the user fees will be assessed on a per-member-per-month basis to account for membership fluctuations, HHS will collect the fees from issuers annually in July of the year after the applicable benefit year to align with issuer’s payments and charges processing.

HHS anticipates that the total cost to operate the risk adjustment program on behalf of states for 2014 will be less than $20 million. Similar to the Marketplace User Fee, the impacted segments are Individual and Small Group.

Where can I find more information?
Click here to read more on Notice of Benefit and Payment Parameters for 2014 final rule.

 

The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.