CMS Suspends Risk Adjustment Payments for 2017 Benefit Year / by Joe Furia

Ann-Marie Alameddin, Vice President of Strategy and General Counsel

Earlier this week the Centers for Medicare and Medicaid announced that $10.4 billion in risk adjustment transfers for benefit year 2017 are on hold until litigation over the risk adjustment methodology is resolved. Back in February the United States District Court for the District of New Mexico issued a decision invalidating CMS’s use of the statewide average premium in the risk adjustment transfer formula for the 2014 – 2018 benefit years pending further explanation of CMS’s reasons for operating the risk adjustment program in a budget neutral manner in those years. The government has moved the court to reconsider its decision and CMS is currently awaiting the court’s ruling. The permanent risk adjustment program, created by the Affordable Care Act, transfers funds in the individual and small group health insurance markets from health plans with lower-risk enrollees to plans with higher-risk enrollees to spread the financial risk and help stabilize premiums.