The Centers for Medicare and Medicaid Services (CMS) is moving ahead with efforts to get the Affordable Care Act risk-adjustment program moving again.
CMS today published a draft emergency patch regulation, for 2018 program operations, in the Federal Register.
A federal court in New Mexico has blocked risk-adjustment program operations, due to concerns about the risk-adjustment methods CMS has established for coverage years 2014 through 2018.
CMS officials say the new draft regulations could affect about $4.8 billion in 2018 ACA risk-adjustment program payments.
Program managers are supposed to try to even out health risk for individual major medical business that generated a total of about $75 billion in premium revenue in 2017.
CMS, an arm of the U.S. Department of Health and Human Services, is already using another set of emergency final regulations to keep the current risk-adjustment procedures in place for 2017, and to collect and pay out risk-adjustment cash for the 2017 plan year.
The new draft regulations would keep the current procedures in place for the 2018 plan year.
The ACA risk-adjustment program is supposed to use cash from issuers of individual and small-group major medical coverage with relatively low-risk enrollees to compensate the individual and small-group issuers that end up with the higher-risk enrollees.
Program managers now use a formula that bases payments partly on statewide average health coverage premiums, rather than an issuer’s own premiums.
What New Mexico Health Connections Says
New Mexico Health Connections, a small, nonprofit health insurer, has argued — with broad support from other smaller, newer health insurers — that the current regulations are unfair to newer insurers, which tend to have less information about their enrollees than more established enrollees, and to insurers with premiums that are lower than the state average.
“The district court reasoned that HHS had not adequately explained its decision to adopt a methodology that used statewide average premum as the cost-scaling factor,” CMS officials write in the official introduction to the draft regulations. “The district court otherwise rejected New Mexico Health Connections’ arguments.”