Final rule allows insurers to get funds and sustain premiums for a more stable ACA market.
The Centers for Medicare and Medicaid Services has finalized the rule for risk adjustment, even as litigation is pending over the calculation of the payment to insurers.
The rule reaffirms the risk adjustment methodology previously established for the 2018 benefit year, allowing plans offering coverage in the Affordable Care Act market to get funds under the program.
WHY THIS MATTERS
Insurers which cover higher-risk patients in the ACA get federal funds to help offset the higher costs from those plans that enroll lower-risk beneficiaries. The risk adjustment program is budget neutral.
The program, and CMS’s reissuing of the rule, allows plans to offer coverage without increasing premiums to cover higher expenses. This helps to create a more stable market.
CMS froze payments earlier this year due to a federal court case over the payments.
In February, a federal court in New Mexico invalidated the use of the statewide average premium in the risk adjustment formula, remanding the case back to the lower court.
CMS filed a motion for reconsideration, but in July, said it would release the $10.4 billion owed to insurers for the 2017 benefit year. Issuers had expressed concern about having to withdraw from markets or becoming insolvent due to the lack of the funding, CMS Administrator Seema Verma had said.
The rule reissued Friday allows funds to be released for the 2018 benefit year. CMS did not release the amount to be funded.
Having the risk adjustment program in place allows premiums to reflect differences in scope of coverage and other plan factors, not differences in the underlying health status of enrollees, CMS said. This gives consumers access to a robust array of affordable coverage options and encourages insurers to price competitively, rather than overly cautiously.
CMS had more affordable plan options in mind when in November, it proposed waivers for states to provide financial assistance for different types of health insurance, not just qualified health plans under the ACA. CMS said the waivers would allow consumers to purchase less expensive plans, such as for catastrophic coverage.
ON THE RECORD
“Although the litigation is still pending, thanks to CMS’ clear commitment and ongoing steps to strengthen the markets, I am pleased to report insurer participation on Healthcare.gov increased for the 2019 benefit year, demonstrating improved confidence in the markets,” Verma said. “(Friday’s) final rule continues our commitment to provide certainty regarding this important program, to give insurers the confidence they need to continue participating in the markets, and, ultimately, to guarantee that consumers have access to better coverage options.”
“We are pleased to see CMS issue this final rule to keep the risk adjustment program in place for the 2018 benefit year, ensuring stability in healthcare coverage for millions of Americans. This important program has worked for years to balance the cost of care between healthy Americans and those with significant medical needs and, as CMS has stated, is working as intended,” said Kris Haltmeyer, vice president, legislative and regulatory policy, Blue Cross Blue Shield Association. “The program’s continued smooth operation is vital to ensure access to a broad range of coverage options for millions of individuals and small businesses,”
Date: December 18, 2018