Trump Administration Resumes Risk-Adjustment Payments to Insurers

The Centers for Medicare and Medicaid Services (CMS) has announced that it will resume risk-adjustment payments to health-care insurers, which are designed to stabilize health-care markets. The move is a reversal for the Trump administration, which had announced the end of the payment policy only three weeks earlier.

CMS Administrator Seema Verma, MPH, indicated that the resumption of payments should reassure health insurance companies, which are in the process of finalizing 2019 market plans. “Alleviating concerns in the market helps to protect consumer choices,” she said.

The risk-adjustment program transfers money from insurers that enroll healthier people to those that cover higher-risk individuals, including those with chronic conditions. The payments stabilize markets by incentivizing insurers to cover sicker patients and maintain plans that would otherwise be unprofitable.

Pointing to a federal court ruling that voided the formula used to calculate the payments, the administration announced the end of the program in early July 2018. While the U.S. Department of Health and Human Services (HHS) has not adjusted its formula, it is preparing a fuller explanation of its methods to submit to the court. Barring further legal barriers or policy shifts, payments will resume in October 2018.

In a statement announcing the resumption of transfer payments, HHS emphasized the importance of market stability. “Taking immediate action to allow for the continued operation of the risk-adjustment program is imperative to maintain stability and predictability in the individual and small-group health insurance markets,” read the statement.

Source: The New York Times, July 24, 2018.