Feds Resume $10 Billion Program for Health Insurers

A news release by the Centers for Medicare & Medicaid said it would resume the program following a suspension announced earlier this month, which prompted anger from insurers.

The federal government has backtracked on its suspension of payments to health insurers.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services said in a news release Tuesday that her agency would resume the $10 billion risk adjustment program. Earlier this month, she suspended it for 2017 following a court decision in New Mexico, prompting outrage from insurers. The program compensated them for covering the sickest people in the individual and small group markets. 

“This rule will restore operation of the risk adjustment program, and mitigate some of the uncertainty caused by the New Mexico litigation,” Verma said in a statement.  “Issuers that had expressed concerns about having to withdraw from markets or becoming insolvent should be assured by our actions today.  Alleviating concerns in the market helps to protect consumer choices.”   

Companies often go back and forth between receiving money from the program and helping to fund it. This year, Moda Health is due money for coverage in 2017. Spokesman Jonathan Nicolas welcomed the reversal.

"Risk adjustment has been an important piece of the puzzle, helping to bring stability to the Individual market," Nicolas wrote in an email. "The 2018 accounting represents a good receivable for us. We look forward to getting it as promptly as possible."

The program was established under the Affordable Care Act, the signature legislative accomplishment of former President Barack Obama. The Republican-led Congress failed last year to repeal the act, leaving the Trump administration to use executive powers to diminish or abolish it altogether.

The Centers for Medicare & Medicaid Services cited a decision by a federal court judge in New Mexico for the suspension. U.S. District Judge James Browning did not justify its payment methodology, adding that it needed to create a rule.  The administration ignored another court ruling -- in Massachusetts -- which backed the program. 

The final rule, announced Tuesday, essentially maintains the same methodology previously established for the 2017 benefit year. The agency needs to start collecting payments for the program in August. The program is based on money from insurers -- not public funds.

Unable to ax the Affordable Care Act, the administration has chopped off pieces. It's ending the mandate forcing people to pay if they're not insured, cutting funds to a program that helped people find and sign up for insurance and curtailing subsidies.

Reach Lynne Terry at Lynne@thelundreport.org.