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March 19, 2016 01:00 AM

Changes to risk-adjustment program are coming, now or later

Bob Herman
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    A controversial federal health program that helps insurers withstand the ebbs and flows of the new insurance exchanges will be put under the microscope this week with the hope of making it fairer in the long term.

    The CMS will host a public meeting Friday in which health insurers, state officials and others will offer their input on how to change the Affordable Care Act's risk-adjustment methodology for 2018 and beyond. Under the permanent risk-adjustment program, which is a zero-sum game, the federal government redistributes money from plans that have lower-cost, healthier members to companies that have higher-cost, sicker members.

    Many co-ops and small insurers have said they didn't have a lot of claims data to show the health status of their enrollees in the first year. Their membership, therefore, looked healthier than it actually was, forcing them to pay into the program.

    The daylong conference calls for changes to risk adjustment in 2018 and subsequent years, but some insurers want more immediate solutions. They say the current system could put them out of business before then.

    Maryland Insurance Commissioner Al Redmer Jr. told Congress last month during a co-op hearing that there are several ways the program could be fixed now. For example, the CMS could exempt “new and fast-growing plans” from risk adjustment for the first few years, or it could cap payments to 2% of the insurer's premium revenue.

    “We are setting up carriers around the country to fail,” Redmer said in written testimony.

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