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July 18, 2018

Physicians to CMS: Unfreeze billions in ACA risk-adjustment payments

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    A coalition of six physician groups are urging the Trump administration to reverse its decision to freeze billions of dollars in payments expected to be made to exchange insurers under the Affordable Care Act's (ACA) risk-adjustment program.

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    Background: CMS halts $10.4B in payments to exchange insurers

    The risk-adjustment program is a permanent program created under the ACA that redistributes funds from exchange insurers with lower-risk enrollees to those with higher-risk enrollees in an effort to encourage insurers to enroll a balance of healthy and sick consumers.

    Insurers' risk-adjustment payments are determined based on an insurer's risk score, which takes into account enrollees' demographics and health conditions, as well as how the company performed in the past, which could indicate how much risk the insurer has taken on.

    Minuteman Health of Massachusetts and New Mexico Health Connections, cooperative health plans (co-ops) created under the ACA, in 2016 filed lawsuits challenging CMS' risk-adjustment payment formula.

    In January, a federal judge in the U.S. District Court of Massachusetts upheld CMS' risk-adjustment payment formula, ruling that the formula is fair. However, a federal judge in the U.S. District Court of New Mexico in February ruled that CMS' risk-adjustment payment formula was flawed, calling it "arbitrary and capricious."

    CMS earlier this month said the agency would halt collecting or making risk adjustment payments for the 2017 coverage year, which total $10.4 billion, citing the February ruling. CMS Administrator Seema Verma said the agency was "disappointed by the [New Mexico] court's recent ruling" and "has asked the court to reconsider."

    Physician groups urge CMS to reinstate risk-adjustment payments

    The physician groups, which together represent more than 500,000 U.S. doctors, in a statement issued Wednesday said they are "concerned" with CMS' decision to halt the risk-adjustment payments, because the payments "help protect patients by allowing insurers to compete without cherry-picking health consumers over those with chronic illnesses and pre-existing conditions."

    In addition, the groups said suspending the payments "could lead to significant premium increases across the country—resulting in families, especially those with chronic health conditions and pre-existing conditions, losing their health care coverage due to insurer departures from the market or the inability to afford coverage."

    The groups said they "can attest to the importance of ensuring that people who need care the most are able to secure affordable health care coverage," and urged CMS "to reverse its decision to halt the risk-adjustment payments, and to instead pursue innovative policy solutions that improve affordability for all individuals."

    The groups that issued the statement are the:

    • American Academy of Family Physicians;
    • American Academy of Pediatrics;
    • American College of Obstetricians and Gynecologists;
    • American College of Physicians;
    • American Osteopathic Association; and
    • American Psychiatric Association.

    Brady says he's talking to admin about reinstating risk-adjustment payments

    Separately, House Ways and Means Committee Chair Kevin Brady (R-Texas) on Monday said he is taking with the administration about reinstating the risk-adjustment payments, The Hill reports.

    "The administration wants to restore those payments, so we're looking at ways that we can help them do that," he said. According to The Hill, Brady did not rule out the possibility that Congress might approve legislation to reinstate the payments. He said, "We're continuing to engage with [HHS Secretary Alex Azar] and others on this" (Haefner, Becker's Hospital Review, 7/13; Japsen, Forbes, 7/15; Coalition statement, 7/11; Sullivan, The Hill, 7/16; Ruoff, Bloomberg BNA, 7/16).

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