Risk corridors. New Section 1860D-15 of the conference agreement provides for the establishment of risk corridors, which are defined as specified percentages above and below a target amount. The target amount is defined as total payments paid to the plan, taking into account the amount paid by the Secretary and enrollees, based on the standardized bid amount, risk adjusted, and reduced by total administrative expenses assumed in the bid. No payment adjustments will be made if adjusted allowable costs for the plan are at least equal to the first threshold lower limit of the first risk corridor but not greater than the first threshold upper limit of the risk corridor for the year, i.e. if the plans are within the first risk corridor. A portion of any plan spending above or below these levels is subject to risk adjustment. If adjusted allowable costs exceed the first threshold upper limit, then payments are increased. If adjusted allowable costs are below the first threshold lower limit, then payments are reduced. Adjusted allowable costs are reduced by reinsurance and subsidy payments. Payment adjustments would not affect beneficiary premiums. During 2006 and 2007, plans would be at full risk for adjusted allowable risk corridor costs within 2.5% above or below the target. Plans with adjusted allowable costs above this level would receive increased payments. If their costs were between 2.5% of the target (first threshold upper limit) and 5% of the target (second threshold upper limit), they would be at risk for 25% of the increased amount; that is their payments would equal 75% of adjusted allowable costs for spending in this range. If their costs were above 5% of the target they would be at risk for 25% of the costs between the first and second threshold upper limits and 20% of the costs above that amount. That is their payments would equal 80% of the adjusted allowable costs over the second threshold upper limit. Conversely, if plans fell below the target, they would share the savings with the government. They would have to refund 75% of the savings if costs fell between 2.5% and 5% below the target level, and 80% of any amounts below 5% of the target. A higher risk sharing percentage would apply in 2006 and 2007 if the Secretary determines that 60 percent of prescription drug plans and MA-PD plans, representing at least 60 percent of beneficiaries enrolled in such plans have adjusted allowable costs that are more than the first threshold upper limit. In this case, paymen...
Risk corridors. The Contractor’s capitation rates for State Fiscal Year 2021 (consisting of April 1, 2020 through and including March 31, 2021) will include a risk corridor as a risk mitigation mechanism whereby SDOH retains gains and losses outside of defined levels, as described in Appendix N.1 of this Agreement, which is hereby made a part of this Agreement as if set forth fully herein. The risk corridor is added in recognition of claims cost uncertainty attributable to the COVID-19 pandemic. Risk corridors for future rating periods will be evaluated by SDOH.
