Peters, Casey Urge Trump Administration to Resume Payments to Stabilize Health Insurance Markets

WASHINGTON, DC – U.S. Senators Gary Peters (D-MI) and Bob Casey (D-PA) today urged the Trump Administration to resume risk-adjustment collections and payments that ensure insurance companies are covering individuals with pre-existing conditions. In a letter to the Administrator of Center for Medicare and Medicaid Services (CMS), Seema Verma, the Senators noted that the court decision cited by CMS as the cause of suspended payments did not include a nationwide injunction and urged CMS to take swift action to address the judge’s concerns.

“Insurers are warning about the short-term effects of missing the deadline for 2017 risk-adjustment payments and collections. If this occurs, it will financially reward the plans that enrolled higher numbers of healthy individuals in 2017 at the expense of plans that enrolled more individuals with preexisting conditions,” wrote Senators Peters and Casey. “In the long term, we will see higher premiums due to the uncertainty this adds to the marketplace, on top of a number of efforts the Trump Administration has taken to undermine our health care system.”

Passed as part of the Affordable Care Act, the risk adjustment program helps protect the availability of coverage for patients with pre-existing conditions. Earlier this month, the Trump Administration froze the transfer of funds among insurers through this program, which is designed to stabilize markets. Experts have warned this action can lead to a steep increase in premiums for millions of Americans.

“In order to prevent rising premiums and protect coverage for individuals with preexisting conditions, CMS needs to act with the utmost urgency to resolve the $10.4 billion hold on the risk adjustment program,” added Senators Peters and Casey. “The risk adjustment program is critical for stabilizing the individual and small group insurance markets and minimizing incentives for insurers to avoid enrolling individuals with higher health risks. We urge CMS to take immediate action by issuing an interim final rule that will protect this successful program.”

The full letter is available below, or click here. 

July 17, 2018

Dear Administrator Verma:

We are writing to express serious concerns about the suspension of $10.4 billion in risk adjustment collections and payments required by federal law following a February 2018 U.S. District Court decision in New Mexico, even though the decision did not include a nationwide injunction prohibiting such collections and payments. The risk adjustment program helps maintain stability in the individual and small group markets. The program is a commonsense way of making sure insurance companies do not avoid covering individuals with preexisting conditions. We urge CMS to live up to its public commitment to a “prompt resolution” by taking swift action, such as by releasing an interim final rule to address the issues raised by the New Mexico district court ruling.

As you know, Judge James O. Browning ruled that the U.S. Department of Health and Human Services (HHS) needs to take further steps to justify in rulemaking its methodology for determining risk adjustment payments and collections for 2017 and 2018. Specifically, the judge requests further justification for keeping the risk adjustment program budget neutral and using statewide average premiums as part of the formula. Although HHS is pursuing a reconsideration of this case, the judge in New Mexico has indicated he will not release his decision until the end of summer.

Letting this issue play out in the courts may not lead to a prompt resolution. Moreover, CMS has a quicker solution at its fingertips. In its 2019 Notice of Benefit and Payment Parameters, CMS included the further justifications sought by the judge. The rule discusses how a budget neutral framework minimizes uncertainty for insurers and prevents HHS from needing to rely on additional appropriated funds. HHS operates the risk adjustment program in every U.S. state, and the use of statewide average premiums as part of the formula ensures a balanced budget on a state-by-state basis, protecting taxpayer dollars. This same justification could be included in an interim final rule for prior years, addressing the judge’s concern while maintaining the Administration’s position in the case.

Insurers are warning about the short-term effects of missing the deadline for 2017 risk-adjustment payments and collections. If this occurs, it will financially reward the plans that enrolled higher numbers of healthy individuals in 2017 at the expense of plans that enrolled more individuals with preexisting conditions. In the long term, we will see higher premiums due to the uncertainty this adds to the marketplace, on top of a number of efforts the Trump Administration has taken to undermine our health care system.

Insurance companies are currently finalizing their rates for 2019. The Blue Cross Blue Shield Association stated that this action will significantly increase 2019 premiums for millions of individuals and small businesses. America’s Health Insurance Plans similarly stated that the decision will have serious consequences for millions of consumers, creating more market uncertainty and increasing premiums for many health plans.

In order to prevent rising premiums and protect coverage for individuals with preexisting conditions, CMS needs to act with the utmost urgency to resolve the $10.4 billion hold on the risk adjustment program. The risk adjustment program is critical for stabilizing the individual and small group insurance markets and minimizing incentives for insurers to avoid enrolling individuals with higher health risks. We urge CMS to take immediate action by issuing an interim final rule that will protect this successful program.

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