CMS May Propose Restarting $10B Risk-Adjustment Payments

The CMS may soon restart making billions of dollars in risk-adjustment payments to insurance companies with plans on the individual market via a new rulemaking.

The agency on Wednesday sent an interim final rule related to the payments to the White House Office of Management and Budget for review.

It’s unclear what exactly the rule will do. However, health policy insiders say there are clues in the rule’s name: “Ratification and Reissuance of the Methodology for the HHS-operated Permanent Risk Adjustment Program under the Patient Protection and Affordable Care Act.”

“It appears from the title of the rule that CMS is attempting to resolve the issue and resume the retrospective payments,” said Phil Waters, a clinical fellow at the Center for Health Law and Policy Innovation at Harvard Law School.

The CMS does not comment on pending regulation under review at the OMB, according to a spokesperson.

The agency halted the payments earlier this month, citing a federal judge’s ruling in New Mexico earlier this year. U.S. District Judge James Browning determined the agency did not adequately justify its payment methodology for the payments and it needed to do so via rulemaking that’s subject to public comment.

The CMS has said that until that legal conflict is resolved it can’t make the payments or receive adjustments from insurers. All in all, the agency was slated to shift $10.4 billion among exchange insurers for 2017.

The CMS likely is addressing the procedural deficiencies that the court cited as a basis for its decision, Waters said.

Since the payment freeze, patient advocates accused the agency of attempting to sabotage the ACA exchanges by not making the payments.

Legal experts argue that the agency could have just paused payments in New Mexico while the legal challenge remained unresolved rather than halting the program across the country.

The accusations have bothered CMS Administrator Seema Verma. “We really are in a tough spot,” Verma said to reporters at an event hosted by Alliance for Health Policy on July 12. “I think there has been a lot of discussion about whether the Trump administration made a decision, but we weren’t. The court told us what to do, and we have to follow what it said.”

Christopher Condeluci, an employee benefits lawyer who used to work for Republicans on the Senate Finance Committee, said he believes the agency when it says it was not attempting to sabotage the exchanges. He noted that administration officials have not repeated their usual rhetoric that Obamacare is a failure. Instead, they say they are looking for ways to fix the problem.

“I truly believe this was an instance where HHS lawyers were erring on the side of being conservative, not politically, but legally,” Condeluci said.

Sabrina Corlette, a research professor at Georgetown University’s Center for Health Insurance Reforms, had worried that consumers would have trouble gaining coverage due to the payment halt. It was unclear whether some companies would leave the individual market without the funds.

“I really hoped it was a temporary glitch and not an active attempt to undermine the marketplace,” Corlette said of the CMS’ decision to halt the payments. “I am even more hopeful today.”

Chris Coleman, an attorney for the Tennessee Justice Center, an advocacy organization, said he was holding off on celebrating until the CMS fully resolves the issue.

Before CMS made its announcement, at least two plans were going to be on the marketplace for each county in his state and premiums in many areas were slated to decrease. Coleman hopes that doesn’t change while the rule is reviewed.

“It’s a good sign, but I will suspend judgment until I see final rule in place and payments flowing again,” Coleman said.


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