Published: Tue, July 10, 2018
Medicine | By Douglas Stevenson

U.S. freezes payments to ACA insurers with sicker patients

U.S. freezes payments to ACA insurers with sicker patients

The Trump administration announced Saturday that it will temporarily halt billions of dollars in payments under the Affordable Care Act's risk adjustment program, a move that could shake up insurance markets.

In the latest swipe at the Affordable Care Act, which Trump was unable to repeal in his first year in office, the Centers for Medicare & Medicaid Services on Saturday said it was putting "on hold" its "risk adjustment" program in which it collects money from insurers with fewer high-cost plan members and transfers the funds to insurers with more high-need patients that require more expensive care. All in all, the program was slated to shift $10.4 billion among insurers in 2017, according to the agency.

The announcement came as insurers were awaiting an annual report that usually comes at the end of June, informing them of whether they owe money into the risk adjustment program or will be paid out for the previous year.

FILE PHOTO: A man fills out an information card during an Affordable Care Act outreach event hosted by Planned Parenthood for the Latino community in Los Angeles, California September 28, 2013. At stake are billions of dollars in payments to insurers with sicker customers. But another district court in MA upheld the formula.

More broadly, the move contributes to a string of actions from the Trump administration, including the cancellation of other ObamaCare payments past year, that have added to insurers' uncertainty and frustration.

"Costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.

The U.S. agency that administers Obamacare is freezing payments to insurers that cover sicker patients, saying a federal court ruling ties its hands.

About 20 million Americans have received health insurance coverage through the program.

"So much uncertainty put in the market at this point of time is very unnerving", said Ritu Agarwal, senior associate dean of research at the University of Maryland Robert H. Smith School of Business, who follows the health care system. "CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets", said CMS Administrator Seema Verma.

CMS was referring to a February ruling from a federal court in New Mexico that invalidated the risk adjustment formula, and a January ruling from a federal court in MA that upheld it.

Some health care experts, however, believe that risk adjustment has caused more damage than good and needs urgent fixing.

It could also encourage more insurers to bow out of Obamacare.

The move by CMS may affect publicly traded insurers that have stuck with Obamacare, such as St. Louis-based Centene Corp.

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