CMS-10532 - Transitional Policy Supporting Statement (Final) Jan clean

Supporting Statement
Risk Corridors Transitional Policy
A.

Justification

1. Circumstances Making the Collection of Information Necessary
Section 1342 of the Patient Protection and Affordable Care Act of 2010 (the Affordable Care Act)
provides for the establishment of a temporary risk corridors program that will apply to qualified
health plans in the individual and small group markets for the first three years of Exchange
operation. Under Title 45 Part 153, Section 530 of the Code of Federal Regulations (CFR), a health
insurance issuer (issuer) offering group or individual health insurance coverage in States that
adopted the transitional policy announced in the Centers for Medicare and Medicaid (CMS) letter
dated November 14, 2013 must submit a report concerning the count of its total enrollment in the
individual market and small group market and the count of its enrollment in individual market and
small group market policies that meet the criteria for transitional policies. 1 The report must be
submitted to CMS for the 2014 benefit year in a manner specified by CMS. Section 153.530(e) sets
out the data requirements for this report.
In this supporting statement, we specify that an insurance company may submit one transitional
adjustment reporting form for multiple issuers in multiple states. Therefore, we are reducing the
burden previously estimated in the 2015 Payment Notice to reflect this more efficient collection
method. CMS is also publishing the data collection template (transitional adjustment reporting form)
and filing instructions associated with this information collection for public comment. The filing
instructions include more details about how the form is to be submitted, including the email address
where the form should be submitted, and other technical submission instructions. CMS will begin
accepting data reporting form submissions on February 9, 2015. Transitional adjustment reporting
forms must be submitted to CMS by February 13, 2015.
2. Purpose and Use of Information Collection
The data collection of transitional adjustment reporting forms provided by an issuer for each State’s
individual and small group markets will be used by CMS to amend the risk corridors program
provisions in 45 CFR Part 153 to mitigate any unexpected losses for issuers of plans subject to risk
corridors that are attributable to the effects of this transitional policy. Specifically, CMS will use the
data to calculate the risk corridors adjustment percentage, if any, in transitional states.
For the 2014 benefit year, we are implementing an adjustment to the risk corridors program that will
help to further mitigate unexpected losses for QHP issuers with plans that are affected by the
transitional policy. To effectuate these adjustments, we must estimate the State-specific effect on
average claims costs. HHS will analyze enrollment data, and calculate the State-specific
adjustments that issuers will use in their risk corridors calculations for the 2014 benefit year.
3. Use of Improved Information Technology and Burden Reduction
Each issuer conducting business in the individual or small group markets in transitional states will
use a spreadsheet to submit its report electronically to CMS for each State and market (individual
1

http://www.cms.gov/CCIIO/Resources/Letters/Downloads/commissioner-letter-11-14-2013.pdf

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and small group market only) in which it conducts business. Information will be collected
electronically by email.
4. Efforts to Identify Duplication and Use of Similar Information
The transitional adjustment is the result of recent new policy promulgated by HHS. Similar
information has never been collected.
5. Impact on Small Businesses or Other Small Entities
As stated in the Regulatory Impact Analysis of the HHS Notice of Benefit and Payment Parameters
for 2015(2015 Payment Notice; 79 FR 13825), CMS does not believe that the required submission of
transitional adjustment reporting forms to the Secretary will have a significant impact on a
substantial number of small entities because insurance companies offering comprehensive health
insurance policies generally exceed the size thresholds for “small entities” established by the Small
Business Association.
6. Less Frequently
This is a one-time data collection.
7. Special Circumstances Relating to the Guidelines of 5 CFR 1320.5
No special circumstances apply to this collection.
8. Federal Register Notice/Outside Consultation
On September 5, 2014, CMS published a 60-day notice in the Federal Register (79 FR 53069) for the
public to submit written comments on this information collection. Commenters requested that CMS only
collect the data that is necessary to calculate the transitional adjustment. CMS also received comments
on the data submission deadline for the transitional adjustment. One commenter suggested that CMS
postpone the data collection deadline until April 30th, when issuers will have submitted data through the
distributed data environment for calculation of reinsurance and risk adjustment amounts. Another
commenter requested that CMS publish the transitional adjustment that will apply to each state before
January 31st, so that issuers can include that information in their end of the year financial reports.
We understand the importance of issuers being able to estimate the effect of the transitional
adjustment on risk corridors payments in their end of year financial reports. However, we do not
anticipate that CMS will be able to receive complete data submissions from issuers, calculate the
adjustments, and publish the adjustments by January 31, 2015. Because transitional plans are not
compliant with Affordable Care Act market reforms, the claims of enrollees in these plans will not
be processed through the distributed data environment. Therefore, we are not postponing the data
submission deadline through April. Instead, we are changing the submission window to accept
submissions from February 9, 2015 through February 13, 2015. All transitional reporting forms
must be submitted to CMS by this deadline. This new deadline will allow CMS time to calculate the
adjustment amounts, with the goal of publishing these amounts as soon as possible.

We are clarifying that this data submission requirement only applies to transitional enrollment in the
non-grandfathered individual and small group markets in transitional states. CMS did not receive
any comments on the burden associated with this data submission requirement. We do not believe
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that any of the modifications that we are making to this ICR as a result of public comment will
substantially affect the burden estimated previously.
9. Explanation of any Payment/Gift to Respondents
Respondents will not receive any payments or gifts as a condition of complying with this
information collection request.
10. Assurance of Confidentiality Provided to Respondents
CMS does not intend to publish issuers’ transitional adjustment reporting forms on its internet
website. Because no individually identifiable personal health information will be collected, no
personally identifiable personal health information can be disclosed.
11. Justification for Sensitive Questions
These collections do not contain sensitive questions.
12. Estimates of Burden Hours (Total Hours and Wages)
We estimate that 39 states are adopting the transitional policy outlined by CMS, and that up to 2,400
individual and small group health insurance issuers may operate in these states. A health insurance
company may submit data in a single reporting form that includes data for multiple issuers that
operate in multiple states. On average, health insurance companies and health insurance issuers
operate in 6 states. Therefore, we expect health insurance companies representing a total of 2,400
issuers to submit 400 transitional adjustment reporting form filings.
An issuer offering coverage in the individual or small group markets of transitional states is required
to submit data for each market segment (individual and small group market only) in each transitional
state in which it issues health insurance coverage. As described in the regulatory impact analysis
(RIA) of the 2015 Payment Notice, the preparation and submission of reports is expected to require
an insurance analyst (with an hourly labor cost of $38.49).
As set out in 45 CFR §153.530(e), the transitional adjustment reporting form to the Secretary is
comprised of two parts: the count of total member-month enrollment in the individual market and
small group market and a count of total member-month enrollment in the individual and small group
policies that meet the criteria for transitional policies based upon the relevant benefit year. Because
the risk corridors amount is calculated based on data from non-grandfathered plans in the individual
and small group markets, issuers must submit total member-month enrollment in their nongrandfathered individual and small group markets.
On January 23, 2015, 2,400 issuers are expected to file a total of 400 transitional adjustment
reporting forms with the Secretary. We estimate that each issuer or health insurance company will,
on average, incur a burden of 1 hour (and an equivalent cost of approximately $38.49) per response.
Therefore, we estimate an aggregate burden of 400 hours and $15,396 as a result of this requirement.

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Table 1: Burden and Cost Estimates for Transitional Adjustment Reporting Form Response
Form

Type of
Respondent

Number of
Respondents

Average
Number of
Reports per
Respondent

Frequency

Estimated
Burden
Hours per
Respondent

Transitional
Adjustment
Reporting
Form

Private
Company

400

1

1

1

Wage
per
Hour
(incl.
fringe)
$38.49

Burden Cost
Per
Respondent

Total
Estimated
Burden
Hours

$38.40

400

13. Capital Costs
There are no costs other than the hour burden shown in Items 12 and 14.
14. Cost to Federal Government
Table 2: Estimate of Cost to Federal Government
Type Federal
Employee Support

Total Burden
Hours per Reviewer

Total
Reviewers

Data Analysis

2 hr per data submission for each filing
(400 submissions–800hrs) 2

Hourly
Wage Rate (GS 14
equivalent) – (includes
fringe)

1

Total Federal
Government
Costs

$72

$52,600

Salaries are based on a 14 Grade/Step 1 in the Washington DC area with a benefit allowance for a
total salary of $150,000.
15. Explanation for Program Changes or Adjustments
This is a new information collection.
16. Plans for Tabulation and Publication and Project Time Schedule
Health insurance companies must submit the transitional adjustment reporting form for the 2014
benefit year to CMS from February 16, 2015. HHS will publish the transitional adjustment
percentage that applies to each state on its website.
17. Reason(s) Display of OMB Expiration Date is Inappropriate
Not applicable.

2

A data submission includes responses for all states in which an issuer operates.

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