Maria Vullo, New York's financial services superintendent, says the Affordable Care Act's risk-adjustment program has had unintended consequences. (Photo: New York Department of Financial Services)

New York state may create a program of its own to change the effects of the Affordable Care Act risk-adjustment program on its small-group health insurance market.

Maria Vullo, the state’s financial services superintendent, is getting ready to adopt an emergency regulation that would let the state Department of Financial Services set up a market stabilization pool for the small-group market for the plan year.

The department “is taking appropriate action to rectify certain unintended consequences of the federal risk-adjustment program and correct the current imbalance due to issues that are not accounted for in the federal program,” Vullo says in a statement about the emergency regulation.

The ACA risk-adjustment program is supposed to use cash from individual and small-group issuers with healthier-than-average enrollees to help issuers with sicker-than-average enrollees.

In New York state, the program has forced some insurers to transfer more than 30 percent of their premium revenue to competitors, officials say.

“These transfers are due to some factors that are not necessarily related to the relative health of each insurer’s members,” officials say. “In particular, the risk-adjustment program’s calculations include administrative expenses and profits rather than only using claims.”

Related: Small health plans: ACA program may kill us

Under current federal regulations and procedures, officials at the federal Centers for Medicare & Medicaid Services (CMS) expect to publish the risk-adjustment cash transfer amounts for the 2016 plan year in mid-2018.

If New York state insurance regulators think the CMS risk-adjustment figures will hurt the state’s small-group health insurance market, they will require insurers that get cash from the risk-adjustment program to pay up to 30 percent of the risk-adjustment cash into a stabilization pool, officials say in an announcement describing the emergency regulation.

Insurance regulators will then use the cash in the stabilization pool to help the insurers hurt by the ACA risk-adjustment program, officials say.

The emergency regulation will apply only to the 2017 plan year, and New York regulators are still working with all stakeholders, including CMS and insurers, to decide what other actions to take, officials say.

Related:

Actuary gives ACA individual health risk effects an incomplete

PPACA: CCIIO Fears Risk Adjustment Bugs

Have you followed us on Facebook?