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Groups Urge CMS to Reconsider Decision on Risk-Adjustment Payments

For immediate release:
Jul 17, 2018
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CHICAGO – Twenty-eight medical organizations, including the American Medical Association (AMA), sent the following letter to the Centers for Medicare & Medicaid Services (CMS) expressing concern with CMS’ decision to suspend billions of dollars in annual payments to insurers as required under the Affordable Care Act’s (ACA) risk-adjustment program. The letter was sent to CMS Administrator Seema Verma.

The full text of the letter is below. To download a pdf copy, click here.

Dear Administrator Verma:

On behalf of the undersigned organizations, we are writing regarding the decision announced on July 7 by the Centers for Medicare & Medicaid Services (CMS) to suspend billions of dollars in annual payments to insurers as required under the Affordable Care Act’s (ACA) risk-adjustment program. This action comes at a particularly sensitive time, when health plans are making decisions about whether to participate in the individual marketplace and developing premiums for 2019, and states are reviewing rates. We are very concerned that this move will create further uncertainty in the marketplace, negatively impacting patients’ access to affordable and comprehensive coverage, and lead to higher premium increases next year.

The risk adjustment program protects insurers from unanticipated costs in the event that their enrollees are less healthy, as well as minimizes any incentives for insurers to target healthier individuals only for enrollment. Of the three premium stabilization programs authorized by the ACA, the risk adjustment program is the only one that is permanent. Therefore, it is particularly critical that the program remain operational. It works by transferring funds from plans with healthier enrollees in the individual and small group markets to plans with less healthy enrollees. CMS’ announcement means that almost $10.4 billion in risk adjustment transfers for 2017, expected to be paid in the fall of 2018, will not be made until the litigation is resolved in New Mexico Health Connections v. HHS, a case where the U.S. District Court in New Mexico invalidated the methodology used to calculate risk adjustment payments based on the statewide average premium. The Court’s invalidation was based on the need for further explanation by CMS for operating the risk adjustment program in a budget neutral manner. This ruling is in conflict with the federal court decision in Massachusetts that upheld the risk adjustment methodology.

CMS’ decision to delay these transfers jeopardizes patients’ ability to access affordable coverage as well as lifesaving care and treatment. Insurers may be unwilling to sell coverage under such uncertain conditions, and those that do will likely increase premiums. The implications of a delay in calculating, collecting, and making the risk adjustment payments to insurers are significant for both patients and providers. Therefore, we urge CMS to reconsider its decision and seek other possible options to resolve the issues raised by the New Mexico risk adjustment litigation. For example, CMS could issue an expedited rule using the same rationale it used for the risk adjustment payment methodology in the final rule on Notice of Benefit and Payment Parameters for 2019.

We appreciate your consideration of this urgent matter.

Sincerely,

  • AARP
  • Alliance of Specialty Medicine
  • American Academy of Family Physicians
  • American Cancer Society Cancer Action Network
  • American College of Physicians
  • American College of Surgeons
  • American Diabetes Association
  • American Heart Association
  • American Hospital Association
  • American Liver Foundation
  • American Lung Association
  • American Medical Association
  • Arthritis Foundation
  • Association of American Medical Colleges
  • Crohn’s & Colitis Foundation
  • Cystic Fibrosis Foundation
  • Epilepsy Foundation
  • Family Voices
  • Federation of American Hospitals
  • Hemophilia Federation of America
  • Leukemia & Lymphoma Society
  • Lutheran Services in America
  • March of Dimes
  • Mended Little Hearts
  • National Alliance on Mental Illness
  • National Multiple Sclerosis Society
  • National Organization for Rare Disorders
  • National Patient Advocate Foundation

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Media Contact:
Jack Deutsch
AMA Media & Editorial
202-789-7442
[email protected]

About the AMA

The American Medical Association is the powerful ally and unifying voice for America’s physicians, the patients they serve, and the promise of a healthier nation. The AMA attacks the dysfunction in health care by removing obstacles and burdens that interfere with patient care. It reimagines medical education, training, and lifelong learning for the digital age to help physicians grow at every stage of their careers, and it improves the health of the nation by confronting the increasing chronic disease burden.

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