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CMS freezing of risk adjustment payments predicted to drive up insurance premiums

United States District Court Ruling Puts Risk Adjustment On Hold

The Centers for Medicare & Medicaid Services announced July 7 that it will no longer make adjustment payments to insurers until litigation regarding them is resolved, further destabilizing the individual and small group markets created by the Affordable Care Act.

The risk adjustment payment uses statewide average premiums to draw money from health insurance plans within a state that have low levels of high-need patients and funnels that money to plans in that state with high amounts of high-need patients, as a way to minimize adverse selection and to spread risk.

The government was set to make a budget neutral payment of $10.4 billion for the 2017 plan year. But in a rare Saturday announcement, the agency said July 7 that the reason for putting the risk adjustment payments on hold was differing legal opinions on the validity of the payments.

Source: United States District Court Ruling Puts Risk Adjustment On Hold

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