A bit of potential regulation CMS sent to OMB for review suggests the agency may be tweaking its formula to appease a federal judge.
Less than two weeks after the Centers for Medicare & Medicaid Services unleashed another wave of uncertainty across the health insurance industry by freezing billions of dollars in expected risk-reduction payments, the agency signaled Thursday that it may reverse course.
Although a CMS official tells HealthLeaders Media that the government is continuing to review all of its options, an interim final rule CMS sent Thursday to the Office of Management & Budget for review suggests one of those options could be to restart the program.
Related: Uncertainty Reigns After $10B in ACA Risk Adjustments Frozen
The title of the potential regulatory item, "Ratification and Reissuance of the Methodology for the HHS-operated Permanent Risk Adjustment Program under the Patient Protection and Affordable Care Act," indicates that CMS is looking to recalibrate the way it calculates payments. Doing so could accomplish what critics said CMS should have done in the first place, instead of halting the payments.
Andy Slavitt, who served as an acting CMS administrator under former President Barack Obama, said drafting an interim final rule would easily solve the problem at hand. Slavitt described the halting of risk-reduction payments as "aggressive and needless sabotage" targeting the ACA.
Because it is labeled as an interim final rule, the item could take effect immediately, as Bloomberg reported.
What Happened
The Wall Street Journal reported on Friday, July 6, that the Trump administration was expected to suspend the ACA risk-reduction program altogether. That weekend, on Saturday, July 7, CMS announced that it would freeze the payments, citing a February order from a federal judge in New Mexico.
"As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold," CMS Administrator Seema Verma said.
A federal judge in Massachusetts sided with CMS in January, ruling that the ACA risk-adjustment methodology was legal. But the federal judge in New Mexico reached the opposite conclusion in February, ruling that the risk adjustments could not be based on statewide average premiums.
Related: Is Panic Over Risk Adjustment Loss Much Ado About Nothing?
In a hearing held June 21, CMS formally challenged the ruling of the New Medico judge, who indicated he would review the matter further and aim to have a subsequent opinion by the end of the summer, according to court records.
In a court filing Thursday, CMS notified the New Mexico judge that it had begun promulgating an interim final rule that could impact the case. The title of the potential regulatory item was included in the filing, but additional details and an estimated timeline were not.
Health Plans Weigh In
In a filing of their own Thursday, America's Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) urged the New Mexico judge to alter his February ruling.
"CMS's unexpected decision to freeze all risk adjustment transfers nationwide has serious and time-sensitive ramifications for the functioning of the market for individual and small group health plans," they wrote. "That decision deprives many AHIP and BCBSA members of substantial risk adjustment payments that the Affordable Care Act guarantees and that they have relied on in making critical plan offering and pricing decisions."
Related: Risk-Adjustments Freeze Would Hit Some Insurers Harder Than Others
The groups urged the judge to act quickly, as health plans are quickly approaching a number of deadlines in August, September, and October for the 2019 plan year.
There's even uncertainty over how health plans are supposed to treat risk-adjustment payments in calculating their medical loss ratio, AHIP and BCBSA said, noting that the deadline to do so is July 31.
Stakeholders Urge Restart to ACA Risk-Adjustment Payments by HLMedit on Scribd
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
The agency hasn't said whether it will resume the program, but its actions suggest that may be the case.
Critics had argued CMS should have pursued an interim final rule rather than freezing payments.
Health plans are pushing for a quick resolution, as deadlines for the 2019 plan year loom.