The administration of President Donald Trump has rushed to save the individual major medical open enrollment period for 2019, by patching the Affordable Care Act risk-adjustment program.
A federal agency, the Centers for Medicare and Medicaid Services (CMS), has developed emergency regulations that could let the ACA risk-adjustment program collect the receivables and pay the payables already in the pipeline for 2017.
CMS has also started to develop formal ACA risk-adjustment patch regulations for 2018.
The regular purchasing season for individual products for 2019 starts Nov 1. Health insurers are racing to complete their 2019 product and rate filings now.
Matt Eyles, the president of America’s Health Insurance Plans, said in a statement that the new CMS regulations could increase the odds that insurers will sell individual coverage in 2019, by providing stability and predictability for the individual market. Eyles praised CMS for working quickly to resolve the uncertainty around risk-adjustment program.
“The administration has taken an important step to ensuring more affordable coverage choices are available for all Americans, including high-need patients and those with pre-existing conditions,” Eyles said.
ACA Risk-Adjustment Program Basics
When Democrats in Congress created the Affordable Care Act, they took away most of the mechanisms health insurers once used to hold down medical claims.
To protect health insurers against the risk that some would end up with much sicker patients than others, ACA drafters included the ACA risk-adjustment program. The program affects the insurers that sell individual and small-group major medical coverage.
The ACA risk-adjustment program is based on a similar program already in use in the Medicare Advantage plan market. The program uses information about patient characteristics to give each patient a health risk score. A plan that ends up with patients with low average risk scores is supposed to send cash to the ACA risk-adjustment program managers at CMS. The program managers are supposed to pay the cash to the plans with high patient risk scores.
The insurers that have been getting large amounts of risk-adjustment cash like the program a lot better than the insurers that are paying large amounts of cash into the program.
New insurers without little information about their enrollees’ health, and insurers with unusually low premiums, say the ACA risk-adjustment program rules and formulas are unfair to new insurers with low coverage premiums.
In February, a federal judge in New Mexico agreed with a small insurer there, New Mexico Health Connections, that the effects of the program in the New Mexico market have been unfair. The judge there blocked operation of the program temporarily, and he has indicated that the case might not be resolved until after Labor Day, according to CMS officials.
CMS is taking two separate but related actions to get the ACA risk-adjustment program unstuck.