- Last week, the CMS released a memo that said they expect to pay a total of $7.7 billion this year in Medicare reinsurance payouts, reflecting data from the 2015 benefit year.
- Under the Medicare reinsurance program, the money would go to insurers that sold plans on ACA exchanges last year and enrolled a large number of high-cost members, Modern Healthcare reports.
- The three-year program was created to protect insurers throughout the first few years after implementing the ACA's individual marketplaces. In 2015, CMS raised the payout rate from 80% to 100% after insurers' contributions exceeded reinsurance payments the year prior, according to a CMS memo.
As part of the reinsurance program, insurers and self-funded plans contribute funds to a pool, which the federal government then pays out to the health plans with members that had medical claims exceeding $45,000 but were less than $250,000. For the 2014 benefit year, CMS paid out $7.9 billion.
The CMS has collected $5.5 billion for reinsurance so far this year, and is scheduled to collect another $1 billion by November. About $1.7 billion in unused reinsurance contributions will be carried over from the 2015 benefit year, though $500 million in operating expenses is legally required to go to the General Fund of the U.S. Treasury.
The payouts will be much needed for some insurers, like Blue Cross Blue Shield, that have reported significant financial losses, which they attribute to the ACA, Healthcare Dive previously reported.