Centene, Molina Will Pay Less Than Estimated Into Risk Adjustment Program

By Leslie Small

Some health insurance companies received welcome news when CMS released its summary report on risk adjustment transfers for the 2018 benefit year.

The Affordable Care Act's permanent risk adjustment program, which applies to the individual and small-group markets, redistributes funds between health plans with lower-risk enrollees and those with higher-risk enrollees.

Centene Corp. estimated that it would have to pay $928 million into the risk adjustment program for 2018, but would actually end up owing $669 million, according to analyses from Credit Suisse and Citi. Another winner appeared to be Molina Healthcare, Inc., as its risk adjustment payable is $93 million less than what was accrued on its balance sheet at the end of 2017, Evercore ISI analysts noted.

Some Blues plans, meanwhile, are set to receive sizeable payouts, with Blue Shield of California ($975 million), Health Care Service Corp. ($655 million) and Blue Cross Blue Shield of Florida ($536 million) leading the pack, according to Credit Suisse’s A.J. Rice.

Some have blamed the risk adjustment program for contributing to the massive financial losses that led many of the ACA-created Consumer Operated and Oriented Plans (CO-OPs) to shutter. The CO-OP New Mexico Health Connections even filed a lawsuit challenging the federal government's decision to make the program budget neutral and use statewide average premiums in the risk adjustment formula.

While that litigation is ongoing, "there's no danger" that the risk adjustment program will disappear, according to Katie Keith, a research professor at Georgetown University's Center on Health Insurance Reforms. "The biggest risk is that CMS has to make changes to its risk adjustment methodology," she tells AIS Health via email, adding, "but I think even that is unlikely."

From Health Plan Weekly