CMS: 2017 Risk Adjustment Transfers to Begin in September

The Centers for Medicare & Medicaid Services expects to begin $10.4 billion in risk adjustment transfers for benefit year 2017 in September, according to a final rule posted last night. 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. On July 9, CMS announced that the transfers were on hold due to litigation. 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. The final rule adopts the previously published methodology for the 2017 benefit year with additional explanation. The agency said it intends to issue a new proposed rule on the risk adjustment methodology for the 2018 benefit year. Twenty-eight health care organizations, including the AHA, last week urged CMS to reconsider its decision to suspend the risk adjustment transfers.