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Feds resume Obamacare risk payments

ALBUQUERQUE, N.M. — Earlier this month, the Trump administration suspended billions of dollars in payments under the Affordable Care Act, citing a New Mexico Health Connections lawsuit as the impetus behind its decision.

The administration said Tuesday it would resume those payments, and stated that a newly-released rule from the Centers for Medicare and Medicaid Services “mitigate(s) some of the uncertainty caused by the New Mexico litigation.”

“Issuers that had expressed concerns about having to withdraw from markets or become insolvent should be assured by our actions today,” said CMS Administrator Seema Verma in a press release.

Health Connections CEO Marlene Baca said in a statement that the company is reviewing its options.

The Affordable Care Act’s risk adjustment program transfers payments from insurers with healthier patients to those with sicker clientele within the individual and small group markets. Health Connections argued in a 2016 lawsuit that the methodology used to calculate the risk payments was flawed.

Earlier this year in Albuquerque, U.S. District Judge James O. Browning agreed with the insurer on that point and vacated the CMS rule that governs the program.

CMS on July 7 said it was suspending risk adjustment payments in the wake of the Health Connections decision until “the litigation is resolved.” Several insurance associations claimed the payment suspensions would create instability in the industry and likely increase premiums, while Health Connections said the development was a positive one for both the company and the industry.

CMS now says risk adjustment payments will resume on Oct. 22. A new rule – issued without the typical notice and comment period, according the CMS release – “provides a fuller explanation supporting the 2017 risk adjustment methodology, consistent with the judge’s request, and allows (CMS) to resume the risk adjustment program without delay.”
Baca previously told the Journal that Health Connections has sufficient funds to cover its 2017 risk adjustment obligations if the payments were reinstated.

A CMS report shows Health Connections will have to pay a net sum of about $5.6 million.

Health Connections is one of four co-ops still in existence out of the 23 created by the Affordable Care Act. A 2016 congressional report found that risk penalties were one of several factors that led to the demise of many of the co-ops.

American Medical Association President and Albuquerque-based oncologist Barbara McAneny said in an interview Wednesday that “the devil is in the details” when it comes to risk adjustment programs, but having one in place is crucial to ensuring that health organizations offer insurance plans to sick and low-income people at affordable prices.

“Otherwise, you’ll have more people moving to low-premium, high-deductible insurance plans, and many of them won’t get the care they need,” she said.