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CMS Proposes Risk-Adjustments Fix for 2018

By Steven Porter  
   August 09, 2018

The proposal reflects a similar technical clarification CMS made last month in its rule for the 2017 benefit year.

A month after halting billions of dollars in risk-adjustment payments to insurers, and two weeks after the payments were unfrozen, the Centers for Medicare & Medicaid Services proposed a fix Wednesday for the program's 2018 benefit year.

The fix looks an awful lot like the original.

The proposal includes a technical clarification on two items that had prompted a federal judge in New Mexico to declare the government's risk-adjustment payment calculation methodology illegal in February. It explains the use of statewide average premiums and clarifies that the program is budget-neutral by design.

"This rule does not propose to make any changes to the previously published HHS-operated risk adjustment methodology for the 2018 benefit year," the proposed rulemaking states.

The proposal, which is scheduled to publish in the Federal Register on Friday, will be subject to public comments through September 7. It reflects a similar technical clarification CMS made last month in its rule for the 2017 benefit year, when the risk-adjustment payments were unfrozen.

"Our goal has been, and will continue to be, to stabilize the market and provide American consumers with more affordable health coverage options," CMS Administrator Seems Verma said in a statement Wednesday.

But the government has faced criticism, from the risk-adjustment program's supporters and opponents alike, for its response to the New Mexico ruling.

When the payments were halted in early July, critics said CMS was using the court ruling as "an excuse" to inject uncertainty into an ACA program in a form of "aggressive and needless sabotage." When the payments were unfrozen in late July, the nonprofit health plan that had successfully challenged the methodology in court suggested the government's claim that the case would result in widespread disruption "was a purely self-inflicted wound."

Sally C. Pipes, president and CEO of the San Francisco–based pro-free-market policy think tank Pacific Research Institute, said in an op-ed for Forbes that the decision to reinstate the risk-adjustment program was both a "capitulation" and a "mistake."

"The Trump administration should have stuck to its guns—and ended its micromanagement of the insurance market," Pipes wrote.

The government's critics on both sides have contended that CMS had more options than it let on. When asked multiple times this week whether it could have used rulemaking to address the court's concerns in early July, rather than freezing the risk-adjustment payments, CMS spokespeople did not comment.

Editor's note: This story has been updated to include a comment from Pacific Research Institute President and CEO Sally Pipes' op-ed.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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