Dive Brief:
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In a new final rule, CMS reissued the Affordable Care Act's risk adjustment program for payers in the ACA exchanges for the 2018 benefit year.
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The reissue includes an additional explanation of the program that pays insurers more to cover sicker Americans, including people with chronic conditions and comorbidities. The risk adjustment programs keep down costs for payers and consumers.
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In February, a federal judge in the U.S. District Court for the District of New Mexico vacated the risk adjustment program, namely the statewide average premium in the HHS methodology.
Dive Insight:
The ACA's risk adjustment program helps payers cover sicker people. Without the program, critics say insurance companies may attempt to cherry pick the healthiest members.
A judge earlier vacated the CMS risk adjustment methodology from 2014 to 2018. CMS' decision to release an updated rule will "preserve the consistent, ongoing operation of the risk adjustment program for the 2018 benefit year," the agency said.
On Twitter, Justine Handelman, senior vice president of policy at Blue Cross Blue Shield Association, praised the commitment to risk adjustment.
Everyone should have access to #quality #healthcare, including those w/ pre-existing conditions. Risk adjustment balances the cost of care for healthy Americans & those w/ significant medical needs. Thank you @CMSGov for providing this much-needed consistency. https://t.co/a1XaeAMioi
— Justine Handelman (@JustineHandelm1) December 7, 2018
CMS Administrator Seema Verma said in a statement that the final rule gives "insurers the confidence they need to continue participating in the markets, and, ultimately, to guarantee that consumers have access to better coverage options."
This rule will restore operation of the risk adjustment program, and mitigate some of the uncertainty caused by the #NewMexico litigation: https://t.co/21mhEFtL8s
— Administrator Seema Verma (@SeemaCMS) December 7, 2018
The litigation remains pending, but Verma said the CMS commitment to the risk-adjustment is one reason that more payers are offering ACA plans in 2019.
After the ruling earlier this year, the department temporarily froze more than $10 billion in payments to insurers before restarting the program. The final rule didn't go through a notice and comment period. CMS said immediate action was needed and couldn't wait to go through a full process.
ACA payers have increasingly improved their financial footing over the past two years. A recent Kaiser Family Foundation issue brief found that insurance companies in the exchanges have returned to pre-ACA levels of profitability. However, the report also warned that the patient risk pool may be getting sicker. In that case, the risk adjustment program will be there to help balance the added risk for payers.