The Centers for Medicare & Medicaid Services today announced that $10.4 billion in risk adjustment transfers for benefit year 2017 are on hold until certain litigation over the risk adjustment methodology is resolved. The permanent risk adjustment program, created by the Affordable Care Act, transfers funds in the individual and small group health insurance markets from health plans with lower-risk enrollees to plans with higher-risk enrollees to spread the financial risk and help stabilize premiums. In February, a federal district court in New Mexico invalidated CMS’s use of the statewide average premium in the risk adjustment transfer formula for the 2014-2018 benefit years, pending further explanation of the agency’s reasons for operating the program in a budget neutral manner in those years. “In light of a contrary decision by the United States District Court for the District of Massachusetts, the government moved the New Mexico district court to reconsider its decision, and CMS is currently awaiting the court’s ruling,” the agency said .“CMS is seeking a quick resolution to the legal issues raised and will inform stakeholders of any update to the status of collections or payments at an appropriate future date.”

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