The Risk Corridors program, which was designed to protect companies competing on the exchanges from unexpected losses during the first few years of the ACA, is not on track to provide the protection that was intended, according to some analysts.
"Our read on it is that the administration is doing all they can to make funds available for this program, but the viability is really in question," Alexis Levy, director at Healthscape Advisors, tells Healthcare Dive.
"The biggest issue this year was with the transitional policies, which allowed people who liked their plan to stay on their plan," Levy said. "It really made the risk pool this year a lot sicker than people thought it was going to be."
And now, as Levy explains, because of the recently-passed Congressional spending bill, the program has to be budget neutral—meaning that the Department of Health and Human Services can only use money that comes in from the program to compensate the plans that fared poorly—and that is not likely to be enough.
"If you look at what health plans are booking for their accruals for the three Rs—I think a lot of plans have realized that they're not going to be getting a receivable," Levy says. "But further strengthening that, is you notice that not a lot of plans are booking a payable, either. So I think most plans are realizing that their risk was a lot worse and they don't think they're going to have to pay into Risk Corridors.
According to Levy, there's a big risk that plans "just [won't] get funding or as much funding as they should under Risk Corridors."
Here's what payers should watch for as 2015 unfolds:
1. What funds will be available, based on what HHS collects.
If the collections are insufficient, Levy says HHS can plan to borrow from future program years to make up the shortfall. However, that would require waiting until next year before that additional funding would be available. And of course, the program is set to phase out in 2016, so there's a limit to the usefulness of this tactic.
2. The impact on pricing for 2016.
"You’ll probably see plans be more conservative in their pricing for 2016," Levy says. As Healthcare Dive has previously reported, the potential ripple effect of an increase in premiums could add further strain to consumers and payers alike.
3. Program scrutiny from the Republican-led Congress.
Amid the push-back from Republicans and other conservatives who argue that the program is a government bailout, a bill has been put forward again by Sen. Marco Rubio (R-FL) and Rep. Andy Harris (R-MD) to repeal the program. However, Levy says that with this program set to expire soon anyway, she would be surprised to see it get eliminated.
The takeaway from all of this: the program probably isn't going anywhere, but payers should not plan on receiving anything.
"If [payers] had factored any Risk Corridors receivable into the way they wanted to price their products, they're going to have to re-evaluate that," Levy says.