Risk adjustment payments to be based on 2018 premiums, CMS proposes

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CMS will use the statewide average premium for the 2018 benefit year in its risk adjustment payment calculations, allowing the program to continue for the 2018 benefit year, federal officials proposed Aug. 8.

The risk adjustment program was established under the ACA to encourage insurers to participate in the ACA marketplace and accept all customers without charging more for patients in need of substantial medical services. In addition, it was put in place to protect insurance companies from major losses. The program collects money from insurers with fewer high-cost members and transfers those funds to insurers with more high-cost members.

Prior to the proposed rule, CMS issued a final rule July 24 that adopted the risk adjustment methodology CMS used in the 2017 benefit year. The agency did so to continue making $10.4 billion in payments to health insurers for the 2017 plan year. CMS initially froze the payments after a federal court decided earlier this year that the formula to determine risk-adjustment payments was flawed.

The government asked the court to reconsider its decision and is awaiting a ruling.

"Today's proposed rule continues our effort to help stabilize the individual and small group markets," CMS Administrator Seema Verma said in a prepared statement. "Our goal has been, and will continue to be, to stabilize the market and provide American consumers with more affordable health coverage options."

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