Methodology for Permanent Risk Adjustment Program for 2017 Benefit Year

Document Excerpt

This final rule adopts the risk adjustment methodology that HHS previously established for the 2017 benefit year. Section 1343 of the Patient Protection and Affordable Care Act (PPACA) established a permanent annual risk adjustment program under which payments are collected from health insurance issuers that enroll relatively low-risk populations, and payments are made to health insurance issuers that enroll relatively high-risk populations.

In February 2018, a district court vacated the use of statewide average premium as a basis for the HHS-operated risk adjustment methodology for the 2014, 2015, 2016, 2017, and 2018 benefit years on the grounds that HHS did not adequately explain its decision to adopt a methodology that ensures that amounts collected from issuers equal payments made to issuers for the applicable benefit year (New Mexico Health Connections v. United States Department of Health and Human Services et al, No. CIV 16-0878 JB/JHR (D.N.M. 2018)). The government’s motion for reconsideration of that ruling remains pending with the district court. Absent this administrative action, HHS would be unable in the coming months to collect charges or make payments to issuers for the 2017 benefit year. These amounts total billions of dollars, and failure to make the payments in a timely manner threatens to undermine the stability of the insurance markets, as issuers are now in the process of determining the extent of their market participation and the rates and terms of plans they will offer for the 2019 benefit year. Accordingly, HHS is issuing this final rule to allow charges to be collected and payments to be made for the 2017 benefit year. We hereby adopt the rules set out in the publication in the Federal Register on March 23, 2012 and the publication in the Federal Register on March 8, 2016.


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