COVID-19 and MLR Guidance on Risk Corridor Recoveries: State Options for Restoring Funds to Policyholders and the Public

By Sabrina Corlette and Jason Levitis

In April 2020, the Supreme Court ruled that the federal government must restore to health insurers approximately $12.3 billion in risk corridor payments under the Affordable Care Act (ACA). On September 30, the Center for Consumer Information and Insurance Oversight (CCIIO) proposed instructions on how to allocate these risk corridor payments under the ACA’s medical loss ratio (MLR) formula. This guidance means that policyholders will receive an estimated 2.4 percent ($298 million) of the risk corridor payout in the form of MLR rebates. At the same time, 2020 has been a highly profitable year for many health insurers, due to depressed utilization of health care services during the COVID-19 pandemic. In a recent “Expert Perspective” for the State Health & Value Strategies, project, CHIR’s Sabrina Corlette and Jason Levitis consider ways states could potentially redirect insurers’ extra cash to benefit policyholders and the public. Read the full post here.

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