Mark Farrah Associates Reports on 2014 ACA Reinsurance and Risk Adjustment Results

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Aug 19, 2015, 08:00 ET

KENNEBUNK, Maine, Aug. 19, 2015 /PRNewswire/ -- In its latest analysis brief, Mark Farrah Associates (MFA), www.markfarrah.com, summarized key findings detailing the 2014 results of the Reinsurance and Risk Adjustment programs from the Department of Health and Human Services' (HHS) June 30th, 2015 "Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014 Benefit Year". MFA compared actual 2014 Reinsurance funding from HHS with the estimates calculated by the plans as reported in the 2014 NAIC Annual Notes to the Financial Statements by mapping NAIC company codes to HIOS codes used for government reporting by health plans.

The Affordable Care Act (ACA) established state-based Reinsurance and risk-adjustment programs to reduce the financial risk for participating health insurance companies selling coverage on the public exchanges in January of 2014. Reinsurance and Risk Adjustment are designed to provide stability in the early years of health care reform, with Risk Adjustment continuing over the long-term. MFA highlighted the top five Reinsurance receivers and Risk-Adjustment payers and recipients in its analysis brief.

The Reinsurance provision was designed to prevent large premium increases in the individual market. MFA assessed Reinsurance results by aggregating plan data by parent organization and categorized findings based on the volume of 2014 Individual premiums of Individual and small groups. Aggregating the HHS data by group showed that HCSC (Health Care Service Corporation) led the country in Reinsurance receipts from HHS receiving $943,058,565. Anthem, Humana, Blue Shield of CA and Aetna rounded out the top five Reinsurance recipients.

The Risk Adjustment provision transfers funds from lower risk plans to higher risk plans for non-grandfathered individual and small group market plans, inside and outside the Exchange. MFA found that Aetna will contribute the most funds towards Risk Adjustment as compared to all other parent organizations assessed within the HHS reported $336 Million total due. Rounding out the top 5 payers list included Anthem, Humana, Preferred Medical Plan Inc., and Health Republic Insurance of NY.

The top 5 recipients of Risk Adjustment funding were composed of three for-profit companies and two non-profits, Guidewell Mutual (doing business as Blue Cross Blue Shield of Florida) leads the industry in expected receipts of $262M. UnitedHealth, Blue Shield of California, Cigna and Assurant rounded out the top 5 Risk Adjustment recipients.

As the industry braces for more change, the need for health insurer market share and financial performance data has never been greater. In addition to keeping an eye on Health Care Reform and ACA implementation, Mark Farrah Associates will continue to keep up on industry changes by paying careful attention to the Reinsurance, Risk Adjustment and Risk Corridors (3R's) programs. MFA expects to see the quality of the reporting, especially in the Risk Adjustment area, to improve over the next two fiscal years.

To read the full text of "A Brief Analysis of the 2014 ACA Reinsurance and Risk Adjustment Results", visit the Analysis Briefs library on the Mark Farrah Associates website www.markfarrah.com.

About Mark Farrah Associates (MFA)

Mark Farrah Associates (MFA) is a leading provider of health plan market data and analysis tools for the healthcare industry. If your company relies on accurate assessments of health plan market share to support business planning, we encourage you to contact us to learn more about our products. Our portfolio includes the Health Coverage Portal™, County Health Coverage™, Health Insurer Insights™, Medicare Business Online™, Medicare Benefits Analyzer™, and Health Plans USA™ - - www.markfarrah.com.

Mark Farrah Associates
Ann Marie Wolfe, 412-944-2417

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SOURCE Mark Farrah Associates (MFA)