A move over the weekend by the federal agency that regulates the Affordable Care Act stopped payments designed to stabilize the national health-care program, but the decision shouldn’t have an immediate impact on Kansas companies or beneficiaries, experts said.
The Centers for Medicare and Medicaid on Saturday announced that, due to a February court ruling in the U.S. District Court for the District of New Mexico, the agency would suspend $10.4 billion in risk adjustment transfers scheduled to be made for the 2017 benefit year. The court ruled the formula used to determine the risk adjustment payments was flawed. Those payments were put in place as part of the ACA to balance out risks taken on by health insurance companies, transferring funds from issuers with low actuarial risk to those with high actuarial risk.
In other words, if Company A had high claims amounts and Company B in the same risk pool had low claims amounts, Company B would be assessed a risk adjustment charge that would be paid to Company A.
Although the announcement caught some in the industry by surprise as it came so many months after the February court ruling, Kansas insurance industry leaders said they don’t expect the halting of those payments to be a significant issue.
“We will continue to gather more information but at this point, we don’t feel like it’s going to change moving forward with the rates we were going to file with the insurance commissioner by the end of the week,” said Blue Cross Blue Shield of Kansas spokeswoman Mary Beth Chambers.
BCBS of Kansas offers plans on the Kansas marketplace in 103 counties. Medica Insurance Co. offers plans in 105 counties, and Sunflower State Health Plan Inc. in two.
Medica spokesman Greg Bury said, in an emailed statement, “We’re watching the situation closely. We aren’t making any changes to our 2019 plans at this time.”
Julie Holmes, director of the health and life for the Kansas Insurance Department, said due to how recent the announcement came and uncertainty over whether the court will quickly address CMS’s petition for reconsideration of the ruling, it is difficult to determine the impact. But it’s something her department will watch closely.
“It’s a risk adjustment program, so some carriers will receive and some will pay,” she said. “Overall, it’s a neutral outcome within Kansas.”
But if the lack of a risk adjustment payment would jeopardize the willingness of a company to provide health insurance in the state, the situation could change.
“I think market stabilization is a concern,” Holmes said. “We’ll just have to see. I think it’s premature to know what the impact will be until we know is this going to drag on.”
In the national arena, some groups weren’t as restrained about their concerns.
“We are extremely disappointed that the administration has frozen payment transfers under the Affordable Care Act’s risk adjustment program, which is designed to keep costs down for consumers while meeting the medical needs of those requiring significant care,” said Blue Cross Blue Shield Association president and CEO Scott Serota. “Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices. It will undermine Americans’ access to affordable coverage, particularly for those who need medical care the most.”