An insurer participating in Arkansas' private-option Medicaid program has been directed to pay almost $3.3 million in rebates because the amount in premiums it collected in 2016 was considered excessive in comparison with what it spent on medical care, according to a federal report.
St. Louis-based Centene was the only one of three insurers offering coverage to private-option enrollees that was directed to pay rebates as a result of a requirement in the 2010 Patient Protection and Affordable Care Act.
Centene's plans covered about 68,000 customers, including private-option enrollees and those who enrolled outside the Medicaid program.
According to the report by the Centers for Medicare and Medicaid Services, Reliance Standard Life Insurance Co., a division of Tokio Marine Holdings in Japan, also owed $147,236 in connection with large-employer plans covering 761 Arkansans.
The rebates are required under the Affordable Care Act when a company collects too much in premiums compared with what it spends on medical care and "activities that improve health care quality."
Plans covering individuals and small businesses are required to spend at least 80 percent of the collected premiums on medical care and quality improvement.
Large employer plans, defined in Arkansas as those with 51 or more covered employees, must allocate at least 85 percent of collected premiums for medical care and quality improvement.
If spending on medical care and quality improvement falls below the required percentage, known as the medical loss ratio, the insurer must issue rebates.
Centene was the only company listed as owing rebates in connection with plans offered to individual consumers in 2016. No companies were listed as owing rebates in connection with small-business plans.
Under the private option, Arkansas pays most or all of the monthly premiums for individual insurance plans for low-income adults who became eligible for Medicaid under the state's expansion of the program in 2014.
The expansion, which became known as Arkansas Works last year, was covering 285,564 Arkansans as of Jan. 1.
The federal report doesn't say how much Centene's rebate amount was for private-option plans, but company representatives have said in the past that almost all of the company's customers in Arkansas' individual insurance market are private-option enrollees.
Arkansas Department of Human Services spokesman Amy Webb said rebates of private-option premiums would go to the federal government, which paid the full cost of the private option through 2016.
In 2015, Centene rebated almost $6.8 million in premiums it collected in Arkansas in the previous year. All but about $75,000 of that amount went to the Human Services Department, which said it would pass the money along to the federal government.
The next year, Centene was directed to rebate $784,875 in premiums it collected in Arkansas in 2015, according to a Centers for Medicare and Medicaid Services report. Webb said she didn't have information on how much of that was for private-option plans.
According to the agency's reports, no other companies have owed rebates in connection with private-option plans.
Metro on 01/08/2018