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CMS proposes additional rule to address risk adjustment

The 2018 benefit year will now determine risk adjustment payments to insurers, using the statewide average premium.

Susan Morse, Senior Editor

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The Centers for Medicare and Medicaid Services on Wednesday issued a proposed rule to use the 2018 benefit year to determine risk adjustment payments to insurers in the Affordable Care Act.

Previously, CMS had issued a final rule which adopted the risk adjustment methodology of the 2017 benefit year, so the Department of Health and Human Services could continue operation of the program to maintain stability and predictability in the individual and small group health insurance markets. 

However, the rule only allowed the program to continue for the 2017 benefit year.  The rule proposed today would allow the program to continue for the 2018 benefit year, CMS said.

The change is due to a court case in New Mexico challenging the risk adjustment payments.

In February, the United States District Court for the District of New Mexico invalidated the use of the statewide average premium in the risk adjustment formula and remanded the case back to the lower court.

CMS filed for a motion for reconsideration and is still awaiting that decision.

The court action initially led the agency to freeze risk adjustment payments to insurers. The budget-neutral risk adjustment program established under the ACA gives insurers that enroll higher risk individuals payments from those insurers which enroll lower-risk populations.

Last month, CMS reestablished the payments and said it would be paying out $10.4 billion to insurers using the risk adjustment methodology for 2017.

"Today's proposed rule continues our effort to help stabilize the individual and small group markets," said CMS Administrator Seema Verma. "Our goal has been, and will continue to be, to stabilize the market and provide American consumers with more affordable health coverage options."

This proposed rule further explains the justification for using the statewide average premium in the calculation of risk adjustment transfers, and expands on the reasoning behind operating the HHS-operated risk adjustment program in a budget-neutral manner.

CMS seeks comment on the proposal to use statewide average premium in the risk adjustment methodology for the 2018 benefit year.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

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