NY regulators issue emergency rule addressing risk adjustment for small group plans

The New York State Department of Financial Services issued an emergency regulation to address unequal impacts some small group insurers face under CMS' risk adjustment program.

Under the Affordable Care Act, the permanent risk adjustment program was intended to shift funds from insurers with low-cost enrollees to plans with high-cost enrollees. In New York, the department said the program instead had disparate effects on some of the state's insurers and sent a June 28 letter to HHS Secretary Sylvia Burwell concerning the issue. 

The department said the risk adjustment program required some New York insurers to pay 30 percent of their premiums to other insurers. Under the emergency regulation, the department will decide if CMS' 2017 risk adjustment program calculations will negatively impact New York's small group health insurance market. If the department determines the calculations do hurt small group insurers, it will make a market stabilization pool for next year's small group health insurance market including state-specific factors, according to the release.

The pool will require insurers who received risk adjustment funds to pay an allocable percentage of that money into a department-run fund. The department will transfer money from the fund to insurers who were negatively impacted by risk adjustment payments. The amount of money paid into the pool will be determined by the department's estimate of the amount of risk adjustment imbalance, which cannot exceed 30 percent of the total an insurer received from the program. 

Financial Services Superintendent Maria Vullo said to "support the continued success of the ACA and New York's vibrant market, DFS is taking appropriate action to rectify certain unintended consequences of the federal risk adjustment program and correct the current imbalance due to issues that are not accounted for in the federal program."  

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