The CMS is proposing a cut of $300 million over two years to the two states participating in the Affordable Care Act's Basic Health Program.
The agency released a proposed rule on Friday that outlined a new payment methodology for calculating the payments to New York and Minnesota under the program that provides insurance coverage for low-income residents who fall in the range of 133 to 200% of the federal poverty level and aren't eligible for Medicaid or CHIP.
The agency said that the two states will have to make up for the shortfall by increasing their contribution.
The new methodology calls for incorporating an enrollee's age, geographic area, household income, and whether they have coverage in a family plan or by themselves. This is a departure from the current methodology that calculates payments based on the cost of the premium tax credit and cost-sharing reduction payment for the ACA exchange.
"We believe that the proposed approach will increase the administrative feasibility of making federal BHP payments and reduce the likelihood of inadvertently erroneous payments resulting from highly complex methodologies," the rule said.
States have criticized the Trump administration for a decision back in December 2017 to cut federal funding to the program. Two months earlier, Trump had cut off cost-sharing payments.
The Justice Department told HHS back in October 2017 that HHS couldn't send payments to states participating in the basic health program because they came from the same pot of money as the CSRs.
Both New York and Minnesota sued the administration in January 2018 to recoup $1 billion in lost funds due to the cuts. The two states eventually settled with the administration, which agreed to make interim payments of $151.9 million to New York and $17.3 million to Minnesota.