Trump Administration Moves to Extend Obamacare Risk Payments

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By Sara Hansard and Brian Broderick

The Trump administration is trying again on Obamacare risk-adjustment payment rules among health insurers.

The proposed rule (RIN:0938-AT66) from the Department of Health and Human Services would adopt risk adjustment methodology the department previously established for the 2018 benefit year. The risk adjustment program transfers money among health insurers in Obamacare to compensate those with higher-risk patients.

The risk-adjustment transfers were halted temporarily this summer. In early July, the HHS said it was halting risk adjustment after a New Mexico federal court in February vacated the use of the statewide average premium in the HHS-operated risk adjustment methodology for the 2014 through 2018 benefit years. The payments are worth about $10.4 billion for 2017.

Later in July, the HHS’s Centers for Medicare & Medicaid Services issued a final rule that adopted the risk adjustment methodology for transfers related to the 2017 benefit year, so that the government could continue operation of the program to maintain stability and predictability in the individual and small group health insurance markets.

However, that rule only allowed for the program to continue for the 2017 benefit year. The new rule issued Aug. 8 would allow the program to continue for the 2018 benefit year, the CMS said.

“Today’s proposed rule continues our effort to help stabilize the individual and small group markets,” CMS Administrator Seema Verma said Aug. 8 in a statement. “Our goal has been, and will continue to be, to stabilize the market and provide American consumers with more affordable health coverage options.”

Among publicly traded insurers, Centene Corp. and Molina Healthcare Inc. owe money to other insurers under the program, while Anthem Inc. is set to receive funds.

Comments are due Sept. 7. Meanwhile, the lawsuit affecting the transfers is still alive. The HHS said Aug. 8 that the federal government “requested the court reconsider its decision and is currently awaiting the court’s ruling.”

Better Defense

The new rule appears to be consistent with the administration’s efforts in the court and elsewhere to “better defend the current risk adjustment program in order to avoid market disruption,” Joel Ario, a managing director with health care policy consulting firm Manatt Health Strategies, told Bloomberg Law Aug. 8.

“The department, in many people’s view, overreacted to [the February court decision] by suspending the program” in July, said Ario, who was an Obama administration official who headed the Affordable Care Act exchanges.

“Really what they needed was to issue better justification for the program, and that’s what they’re doing now,” Ario said. “There should be no new market disruption on risk adjustment. It’s a good thing that they did today.”

New Mexico Health Connections (NMHC), a 19,000-member Consumer Operated and Oriented Health Plan (CO-OP) created under the Affordable Care Act, filed the suit in federal district court in 2016 challenging the risk adjustment regulations issued during the Obama administration. The CO-OP has argued that using statewide average premiums puts plans that charge lower premiums at a disadvantage to higher-charging plans in the same state.

NMHC owes $5.5 million for 2017, and it has paid millions of dollars for risk adjustment payments in prior years.

“We are currently reviewing and evaluating our options.” NMHC Chief Executive Officer Marlene Baca said in a statement provided to Bloomberg Law Aug. 8.

“We commend CMS’ swift action to issue this additional rule on the risk adjustment transfers for the 2018 benefit year,” America’s Health Insurance Plans spokeswoman Cathryn Donaldson told Bloomberg Law in an email Aug. 8. “As we’ve said in our previous statement, resolving the uncertainty regarding risk adjustment transfers is an important step to ensuring more affordable coverage choices are available for all Americans.”

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