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The CMS Cost Sharing Reduction Reconciliation Delay: What Does It Mean For Health Plans?

By Marie Bowker/Friday, February 20, 2015


Last week, the Centers for Medicare & Medicaid Services (CMS) announced they would delay reconciling 2014 benefit year cost-sharing reductions (CSRs) until April 2016, rather than the previously stated April 2015.

Under the Affordable Care Act, all issuers of qualified health plans (QHPs) must provide cost-sharing reductions to eligible enrollees and will be reimbursed for the value of the CSRs. For health plans, cost-sharing reduction plans present one of the most complicated compliance tasks to come out of the ACA. The law requires that health plans:

·         Determine advance payments to approximate the value of the cost-sharing subsidy

·         Declare, before the start of a plan year, which reconciliation methodology (Simplified or Standard) they’ll use

·         Reconcile all advance payments and actual subsidies at the end of the year

·         Complete an actuarial validation process and certify all results (if using Simplified method)

·         Re-adjudicate 100 percent of claims (if using Standard method)

Now, CMS will reconcile 2014 benefit year cost-sharing reductions for all issuers beginning on April 30, 2016, along with the 2015 plan year reconciliation. CMS also announced that it will allow those that had selected the Simplified methodology to switch to the more accurate Standard methodology. In announcing the move, CMS acknowledged that the Simplified methodology was yielding inaccurate CSR estimates for a number of issuers, and that many issuers using the Standard methodology were facing difficulties upgrading their systems in time for the reconciliation deadline.

This news is a mixed bag for health plans, depending on where they are in their CSR process. Some health plans were ready for the April 2015 deadline, while others were still scrambling to comply.

With all of the other ACA and market pressures plans are under, pushing CSR to the back burner will certainly seem tempting in light of this change. However, as data and analytics experts partnering with a number of plans on CSR solutions and with deep knowledge of the CMS regulations, we at Truven Health advise against this.

Health plans: use this additional time to ensure that your reconciliation projections are accurate and your data and processes are working correctly.  Your CFO and finance team will want this information for accurate accounting now and going forward ― so use this time well! 

If you’ve started the process with Simplified, embrace this chance to switch to the Standard method. If you’ve yet to select a partner, use this as your chance to choose your best fit. Take this time to work out wrinkles in your reconciliation process and get it just right well before the 2016 deadline, to ensure clear vision on your financial outlook.

As always, we’ll continue to monitor these events and share information that impacts your CSR status.

Marie Bowker, Senior Director, Practice Leadership
Bryan Briegel, Director of Operations

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