On Friday, the Department of Health and Human Services (HHS) released a proposed rule expanding on the standards set forth in 2 final rules published in March related to reinsurance, risk adjustment, and risk corridors programs and the establishment of Exchanges and qualified health plans. These programs aim to ensure that insurance plans compete on the basis of quality and service and not on attracting the healthiest individuals.

Key proposals in the draft Notice of Benefit and Payment Parameters for 2014 include:

• Reducing disincentives for health insurance issuers to enroll people with preexisting conditions by using a risk adjustment methodology that assists health plans that cover individuals with higher health care costs and helps ensure that those who are sick have access to the coverage that they need. CMS also outlines the agency's proposed approach to validating risk adjustment data to instill confidence in the program. States that are running an Exchange and their own risk adjustment program can propose a different methodology.

• Stabilizing premiums in the individual market for health insurance by adopting uniform reinsurance payment parameters for the transitional reinsurance program, which is a 3-year program designed to reduce medical risk for issuers and thereby reduce premiums for enrollees. CMS proposes that a state may supplement the HHS reinsurance payment parameters, but must pay for those supplementary parameters with additional state reinsurance collections or state funds (instead of funds collected by HHS under the national contribution rate). CMS also proposes a per-capita rate under which contributions would be collected annually by HHS from all applicable health insurance issuers and group health plans, exclusion of certain types of plans from the reinsurance contribution requirement, and standards governing the calculation of contributions.

• Protecting health insurance issuers against uncertainty in setting premium rates by accounting for profits and taxes in the temporary risk corridors program and aligning this program with the medical loss ratio program.

• Helping low- and moderate-income Americans afford health insurance in Exchanges by making advance payments of premium tax credit to issuers on behalf of certain individuals. CMS is proposing that issuers provide cost-sharing reductions at the point of service for eligible individuals and that CMS directly reimburse issuers for these payments.

• Charging health insurances issuers participating in a federally facilitated Exchange a user fee that would be commensurate with fees charged by state-based Exchanges.