From Health Plan Weekly
In what appears to be a rapid turnaround, CMS sent an interim
final rule to the Office of Management and Budget that could allow the
resumption of risk-adjustment (RA) transfer payments from Affordable Care Act
exchange insurers with lower-risk members to ACA insurers with higher-risk
members. The move complicates a tight financial reporting deadline for carriers
this summer.
The Trump administration said July 7 that a federal court ruling from February was forcing it to suspend the program.
"A speedy release of an interim final rule that resolved the issue would be welcome news for insurers and regulators who are hoping for clarity on when and whether transfers will be made," says Hans Leida, principal and consulting actuary in the Minneapolis office of Milliman, Inc. "Of course, we'll need to see what's in the final rule — and whether it satisfies the judge in the lawsuit — before we know what its impact will be."
Leida describes CMS's suspension of RA transfer payments as "something that's concerning and has a lot of practical implications" for plans. Insurers participating in ACA marketplaces must report revenues and liabilities to CMS by the end of July, "and this suspension of the program creates a conundrum of what to report," he says. "You have to factor risk adjustment into your MLR [medical loss ratio] reports."
Moreover, CMS's program suspension has implications for plans' rating work for 2019, as plans must make final decisions on next year's exchanges by September.
"So far I've seen plans mainly taking a wait-and-see approach," he said July 17. Lost RA collections could become a potential cash flow problem for some insurers if they lack sufficient reserves. "It would be smaller insurers without other businesses to absorb [the deficit]," he says.
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