MAOs Hope for More Clarity on Quota Share Reinsurance

Under Medicare law, Medicare Advantage organizations must assume full financial risk on a prospective basis for the provision of basic benefits provided to enrollees. But certain exceptions exist that allow MAOs to purchase reinsurance, such as excess of loss reinsurance limiting the primary carrier’s liability in excess of a specified dollar “attachment point.” As MAOs seek permissible reinsurance arrangements to manage new risk associated with the coronavirus (see story, above), plans and their actuaries are hopeful that CMS will provide much-needed clarity around the use of quota share reinsurance in a soon-to-be finalized rule, one industry expert tells AIS Health.

Through a proposed rule issued in February (85 Fed. Reg. 9002, Feb. 18, 2020), CMS sought to codify previous policy changes, extend new flexibilities to MAOs and make some major changes to the MA star quality ratings (RMA 2/20/20, p. 1). The rule also included a provision that would define the purchase of reinsurance in a way that CMS hasn’t before. To remove some legal ambiguity mentioned in previous stakeholder comments, CMS said it planned to implement a new exception and “establish in regulation options to use reinsurance for costs beyond a specified threshold.”

© 2024 MMIT
Lauren Flynn Kelly

Lauren Flynn Kelly Managing Editor, Radar on Medicare Advantage

Lauren has been covering health business issues since the early 2000s and specializes in in-depth reporting on Medicare Advantage, managed Medicaid and Medicare Part D. She also possesses a deep understanding of the complex world of pharmacy benefit management, having written AIS Health’s Radar on Drug Benefits from 2004 to 2005 and again from 2011 to 2016. In addition to her role as managing editor of Radar on Medicare Advantage, she oversees AIS Health’s publications and manages the health editorial staff. She graduated from Vassar College with a B.A. in English.

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