Part of the New Mexico Health Connections home page. (Image: NMHC) Part of the New Mexico Health Connections home page. (Image: NMHC)

New Mexico Health Connections, a small health insurer in the Mountain States region, is welcoming the move by the Centers for Medicare and Medicaid Services (CMS) to freeze the Affordable Care Act risk-adjustment program.

The program is supposed to use cash from health insurers that end up with relatively low-risk individual major medical and small-group enrollees to compensate insurers that end up with higher risk enrollees. CMS says it will have to freeze the program temporarily because the U.S. District Court in New Mexico has blocked its ability to use its current risk-adjustment procedures.

America’s Health Insurance Plans and the Blue Cross and Blue Shield Association have put out statements predicting that the program freeze could lead to big increases in 2019 individual and small-group premiums.

New Mexico Health Connections said Monday that a new CMS risk-adjustment program report shows that, in New Mexico, the program is doing more harm than good.

(Related: New Report Shows Why Some Issuers Hate the ACA Risk-Adjustment Program)

“The CMS report proves the formula the federal court in New Mexico vacated in fact does have a terrible reverse Robin Hood effect for the people of New Mexico,” New Mexico Health Connections said in a statement. “It validates the position that new and small local health plans are disproportionately disadvantaged by the current risk adjustment formula.”

The report shows that a unit of Health Care Service Corp., which is a large, Chicago-based Blue Cross and Blue Shield plan operator, and Molina Healthcare Inc., are on track to receive payments.

The report shows that New Mexico Health Connections, which is a small, nonprofit, single-state carrier, and another small, nonprofit, single-state carrier could have to pay millions of dollars into the program, according to New Mexico Health Connections.

New Mexico Health Connections is a nonprofit health coverage provider. A local organization set up the carrier using loans from the ACA Consumer Oriented and Operated Plan program, which was supposed to increase the level of competition in the health insurance market. New Mexico Health Connections is on of the five surviving CO-OP carriers.

New Mexico Health Connections said in its statement that the fact that the ACA risk-adjustment program is taking from smaller, poorer carriers in New Mexico and giving the cash to bigger, richer competitors shows that the ACA risk-adjustment program managers acted in an arbitrary and capricious fashion when they developed the current risk-adjustment formula.

The court ruling that led to the risk-adjustment program freeze “is good for small insurance companies and innovative, low-cost insurance companies, and therefore to anyone who purchases health insurance,” the carrier said.”

The freeze ruling “will lead to a much fairer risk-adjustment formula for all health plans,” the carrier said. “Getting this program fixed will lead to a more stable and affordable market. It will attract more insurance companies because the risk adjustment will be more predictable and will no longer penalize newer, lower-cost insurance companies with innovative approaches to delivering better and more affordable care.”

— Read 5 Reasons the New ACA Risk-Adjustment Storm Could Blow Over, for Agentson ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook and Twitter.