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 high-cost patients. It also was put in place to protect insurance companies from major losses. The program collects money from insurers with fewer high-cost members and transfers it to insurers with more high-cost members.
CMS, a department of HHS that oversees the risk-adjustment program, announced it was suspending the program July 7 after a federal court decided the formula to determine risk-adjustment payments was flawed. The decision sparked an immediate outcry from insurers, which rely on the payments. For the 2017 benefit year, these payments amounted to $10.4 billion.
CMS reversed course and released a rule July 24 that offers further explanation of the program’s methodology to prevent turmoil in the insurance market, according to The New York Times.
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