Trump administration suspends risk adjustment payments for ACA health insurers: 6 things to know

Alia Paavola - Print  | 

The Trump administration is freezing billions of dollars in risk adjustment payments, which were established under the ACA to help insurers that accept high-cost patients protect their bottom lines, according to The Washington Post.

Here are six things to know:

1. CMS, a department of HHS that oversees much of the ACA, announced the decision July 7 after a federal court decided the formula to determine risk-adjustment payments was flawed.

2. The Trump administration suspended the "risk adjustment" program. It 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.

3. Some health insurers who participate in the ACA marketplace may be out billions of dollars. CMS said it won't transfer payments between insurers for the 2017 benefit year — which equates to $10.4 billion.

4. The announcement from CMS released July 7 says the "ruling prevents CMS from making further collections or payments under the risk adjustment program … As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold."

5. The decision drew immediate protest from insurers, who argue that without the money, the insurance market will be disrupted, premiums will rise and fewer health plans will be available for consumers.

6. "Risk adjustment is a mandatory program under federal law," said Scott Serota, president of the Blue Cross Blue Shield Association, according to The Post. "Without a quick resolution this action will significantly increase 2019 premiums for millions of individuals and small business owners. It will undermine Americans' access to affordable coverage, particularly for those who need medical care the most."

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