§ 31-117. Implementation of state-specific requirements for transitional reinsurance and risk adjustment under Affordable Care Act.

   (a) In general. -- The Exchange, with the approval of the Commissioner, shall implement or oversee the implementation of the state-specific requirements of § 1341 and 1343 of the Affordable Care Act relating to transitional reinsurance and risk adjustment.

(b) Limits on responsibilities of Exchange. -- The Exchange may not assume responsibility for the program corridors for health benefit plans in the Individual Exchange and the SHOP Exchange established under § 1342 of the Affordable Care Act.

(c) Operation of transitional reinsurance program. --

   (1) In compliance with § 1341 of the Affordable Care Act, the Exchange, in consultation with the Maryland Health Care Commission and with the approval of the Commissioner, shall operate or oversee the operation of a transitional reinsurance program in accordance with regulations adopted by the Secretary for coverage years 2014 through 2016.

   (2) As required by the Affordable Care Act and regulations adopted by the Secretary, the transitional reinsurance program shall be designed to protect carriers that offer individual health benefit plans inside and outside the Exchange against excessive health care expenses incurred by high-risk individuals.

   (3) (i) The Exchange, in consultation with the Maryland Health Care Commission and with the approval of the Commissioner, may establish a State Reinsurance Program to take effect on or after January 1, 2014.

      (ii) The purpose of the State Reinsurance Program is to mitigate the impact of high-risk individuals on rates in the individual insurance market inside and outside the Exchange.

      (iii) With the approval of and in collaboration with the Board of the Maryland Health Insurance Plan, the Exchange may use revenue received from the Maryland Health Insurance Plan Fund under § 14-504(d) of this article to fund the State Reinsurance Program.

(d) Operation of risk adjustment program. --

   (1) In compliance with § 1343 of the Affordable Care Act, the Exchange, with the approval of the Commissioner, shall operate or oversee the operation of a risk adjustment program designed to:

      (i) reduce the incentive for carriers to manage their risk by seeking to enroll individuals with a lower than average health risk;

      (ii) increase the incentive for carriers to enhance the quality and cost-effectiveness of their enrollees' health care services; and

      (iii) require appropriate adjustments among all health benefit plans in the individual and small group markets inside and outside the Exchange to compensate for the enrollment of high-risk individuals.

   (2) Beginning in 2014, the Exchange, with the approval of the Commissioner, shall strongly consider using the federal model adopted by the Secretary in the operation of the State's risk adjustment program.

HISTORY: 2012, ch. 152, § 3; 2013, ch. 159, § 2.