CMS Tries to Keep the ACA Risk-Adjustment Program Moving

CMS officials say they have tried to address the court’s concerns by explaining the risk-adjustment methods, without making any other changes in the risk-adjustment regulations already adopted for 2018.

CMS officials say the procedures are the way they are because the ACA risk-adjustment program has to support itself, without contributions from the federal government; because CMS needs to set up a system that encourages issuers to keep premiums down, rather than increasing premiums to increase risk-adjustment payments; and because any formula that included an issuer’s own premiums would have required an extra round of adjustment payment adjustments.

If insurers had to wait until after the end of the plan year to have a good idea of what risk-adjustment bills or payments might look like, that would hurt program predictability, officials say.

“Such predictability is important to serving the risk adjustment program’s goals of premium stabilization and reducing issuer incentives to avoid enrolling higher-risk populations,” officials say. “Additionally, using a plan’s own premium to scale transfers may provide additional incentive for plans with high-risk enrollees to increase premiums in order to receive additional risk-adjustment payments”

A copy of the draft regulations is available here.

CMS lists Krutika Amin, Jaya Ghildiyal and Arianne Patterson as the contact people for the draft regulations.

Comments on  the draft regulations are due Sept. 7.

Why This Matters to Agents (Even If You Don’t Sell Health Insurance)

The health of the ACA risk-adjustment program, and the smoothness of any transitions to any major changes in how the individual major medical market works, could be key to insurer’s level of interest in the individual major medical market.

The fate of the program could also be a test of all kinds of private companies’ interest in doing business with the U.S. federal government.

Partly because of differences in how Republicans and Democrats see the Affordable Care Act, health insurers have had difficulties persuading the federal government to live up to what the insurers thought were firm agreements on how the ACA risk corridors insurer subsidy program and the ACA cost-sharing reduction policyholder subsidy program would work.

Serious, ongoing problems with the operations of yet another ACA program could raise further doubts in private companies’ minds of the attractiveness of the federal government as a business partner, in areas inside and outside the health program sector.

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

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