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HHS/CMS RIN: 0938-AR07 Publication ID: Fall 2011 
Title: ●State Requirements for Exchange--Reinsurance and Risk Adjustments (CMS-9975-F) 
Abstract: This rule implements requirements for States related to reinsurance, risk corridors, and a permanent risk adjustment. The goals of these programs are to minimize negative impacts of adverse selection inside the Exchanges. 
Agency: Department of Health and Human Services(HHS)  Priority: Economically Significant 
RIN Status: First time published in the Unified Agenda Agenda Stage of Rulemaking: Final Rule Stage 
Major: Yes  Unfunded Mandates: No 
CFR Citation: 45 CFR 155, 156     (To search for a specific CFR, visit the Code of Federal Regulations.)
Legal Authority: PL 111-148, secs 1341 and 1342   
Legal Deadline:
Action Source Description Date
Final  Statutory    01/01/2014 

Statement of Need: This rule finalizes guidelines for the transitional risk-sharing programs, reinsurance and risk corridors, as well as for the risk adjustment program that will continue beyond the first 3 years of Exchange operation. The purpose of these programs is to protect health insurance issuers from the negative effects of adverse selection and to protect consumers from increases in premiums due to uncertainty for issuers.

Summary of the Legal Basis: This rule implements the new Affordable Insurance Exchanges consistent with title I of the Affordable Care Act of 2010.

Alternatives: None. This is a statutory requirement.

Anticipated Costs and Benefits: Payments through reinsurance, risk adjustment, and risk corridors reduce the increased risk of financial loss that health insurance issuers might otherwise expect to incur in 2014 due to market reforms such as guaranteed issue and the elimination of medical underwriting. These payments reduce the risk to the issuer and the issuer can pass on a reduced risk premium to enrollees. Administrative costs will vary across States and health insurance issuers depending on the sophistication of technical infrastructure and prior experience with data collection and risk adjustment. States and issuers that already have systems in place for data collection and reporting will have reduced administrative costs.

Risks: If this regulation is not published, the Exchanges will not become operational by January 1, 2014, thereby violating the statute.

Action Date FR Cite
NPRM  07/15/2011  76 FR 41866   
NPRM Comment Period End  09/28/2011    
Final Action  01/00/2012    
Regulatory Flexibility Analysis Required: Undetermined  Government Levels Affected: State 
Small Entities Affected: Governmental Jurisdictions  Federalism: Yes 
Included in the Regulatory Plan: Yes 
RIN Data Printed in the FR: No 
Agency Contact:
Alissa Deboy
Health Insurance Specialist, Center for Consumer Information & Insurance Oversight
Department of Health and Human Services
Centers for Medicare & Medicaid Services
7500 Security Boulevard,
Baltimore, MD 21244
Phone:301 492-4428