A small, nonprofit health insurer in New Mexico is trying to block the current efforts of the U.S. Department of Health and Human Services to keep the Affordable Care Act risk-adjustment program in business.
The program is supposed to protect issuers of individual and small-group major medical coverage of taking on more than their fair share of enrollee health risk by using cash from issuers with enrollees with relatively low health risk scores to compensate the issuers that end up with enrollees with relatively high health risk scores.
New Mexico Health Connections filed a suit against Alex Azar II, the HHS secretary, and against Seema Verma, the administrator in charge of the HHS Centers for Medicare and Medicaid Services (CMS), and in the U.S. District Court for the District of New Mexico .
The Albuquerque, New Mexico-based insurer has asked the court to set aside emergency ACA risk-adjustment regulations that HHS and CMS are implementing for risk-adjustment collections and payments for the 2017 benefit year.
The insurer also filed a motion asking the court to strike down the emergency rule.
New Mexico Health Connections won a judgment from the court in February.
The insurer argued that the current risk-adjustment cash transfer formula is unfair, because it penalizes insurers with lower-than-average premiums, simply because they have lower-than-average premiums. The court agreed with the insurer that CMS and HHS had failed to justify the formula, and it blocked CMS and HHS use of the formula to run the risk-adjustment program.
CMS has tried to overcome the effects of the ruling by taking two actions.
CMS readopted its old risk-adjustment regulations for the 2017 benefits year on an emergency basis.
CMS also has started the process of readopting its old risk-adjustment regulations, for the 2018 benefit year, with a new explanation of why it chose the risk-transfer formula it has been using.
CMS officials argued, in an introduction to draft regulations, that adding an explanation to the old regulations should be enough to overcome the effects of the February court judgment, because the court blocked use of the risk-transfer formula based on the argument that CMS had not explained why it had adopted that particular formula.