The Center for Consumer Information & Insurance Oversight (CCIIO) has posted a mathematical tool that could reshape the U.S. health insurance market.
The CCIIO has released a proposed version of an actuarial value calculator that health insurers, regulators, brokers and others could use to measure how much actuarial value (AV) a health insurance plan provides.
The Patient Protection and Affordable Care Act of 2010 (PPACA) calls for health insurance market players to use actuarial value and calculations based on actuarial value to determine whether plans provide right amount of coverage to fit in the platinum, gold, silver or bronze "metal levels." The calculator cannot help a user determine whether a plan provides the minimum required level of coverage value.
The calculator, which is formatted as a spreadsheet, includes boxes for indicating whether, for example, a plan uses an integrated medical and drug deductible, whether the plan applies a daily skilled nursing facility co-payment requirement, and whether a plan imposes a deductible on enrollees who are seeking imaging services or rehabilitative speech therapy in network.
The calculator comes with "continuance tables" or a collection of the population claims data tables used to create the calculator.
The CCIIO published the calculator and the continuance tables on its website last week.
"The AV calculator will be available for both formal and informal calculations and could be used as a tool to assist in the design of health plans," according to officials at the CCIIO's parent, the U.S. Department of Health and Human Services (HHS). "The calculator will allow health plan issuers to devise a compliant plan without the burden of making the assumptions needed or paying for the analysis for an AV calculation."
PPACA PPACA opponents are still looking for ways to kill PPACA or block implementation of the law. If the law takes effect on schedule and works as drafters have predicted, the law will give individuals and small groups the ability to use new federal tax subsidies to buy prescreened coverage through "health insurance exchanges," or Web-based health insurance supermarkets, starting in late 2013, with the coverage to take effect Jan. 1, 2014.
PPACA would require many individuals to own a minimum level of coverage or else pay a penalty, and it would require most employers with at least 50 full-time equivalent employees to provide coverage or else pay a "shared responsibility" penalty.
A gold level plan would cover at least 90 percent of the actuarial value of an "essential health benefits" (EHB) package to be defined by regulators. The lowest value plan that could meet the PPACA minimum coverage standards, a bronze-level plan, would cover 60 percent of the actuarial value of the EHB package.
The AV Calculator
HHS talked about the AV calculator and the continuance tables in proposed AV regulations that were published in the Federal Register Monday.
HHS said it is proposing to define "AV" as being "the percentage paid by a health plan of the total allowed costs of benefits."
HHS is proposing to define the "percentage of the total allowed costs of benefits" as being "the anticipated covered medical spending for EHB coverage ... paid by a health plan for a standard population, computed in accordance with the health plan's cost sharing, divided by the total anticipated allowed charges for EHB coverage provided to the standard population, and expressed as a percentage."
"The AV calculator, as proposed here, has been developed using a set of claims data weighted to reflect the standard population projected to enroll in the individual and small group markets for the identified year of enrollment," officials said.
HHS officials noted that the calculator and continuance tables include only information about in-network care "because, empirically only a small percentage of total costs come from out-of-network utilization."
HHS is asking members of the public for comments on the methods it used to develop the AV calculator and the continuance tables.
CORRECTION: An earlier version of this article suggested that the calculator could be used to determine whether a plan meets minimum value standards. The current proposal calls for the calculator to be used only to determine plan metal levels.