The risk-adjustment program directs insurers with mostly healthier enrollees to reimburse insurers who take up sicker and more expensive enrollees. It was expected to pay out $10.4 billion to insurers this fall, based on their 2017 expenditures.
In March, U.S. District Judge James Browning in New Mexico ruled that the formula that CMS uses to calculate payments was flawed. Browning's ruling concerned a lawsuit that New Mexico Health Corrections, the state's largest health-care co-op, had filed in 2016, contending that the risk-adjustment program favored larger insurance companies.
The co-op had told Browning that the program formula is "disruptive" and is "leading to most everyone raising their rates to double digits." Browning agreed, and in his court order remanded the formula back to CMS for re-evaluation.
"We were disappointed by the court's recent ruling," CMS Administrator Seema Verma said in a statement. "CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets."
The move comes at a time when insurers are already projected to hike up their premiums by double digits next year due to changes to Obamacare under the Trump administration. America's Health Insurance Plans, the trade association representing insurers, decried the payment halt, warning that it will have "serious consequences for millions of consumers," "create more market uncertainty," and "increase premiums for many plans."
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