Regional health insurers and many other small co-op plans incurred big charges under the Affordable Care Act’s risk adjustment program. The year 2015 is the second year of risk adjustment and as per the data, many small insurers had to pay for both years.
The report also shows the details of payout of the reinsurance program of ACA. The insurance payment for all the ACA plans that were sold in the year 2015 comes around $7.8 billion. The temporary reinsurance program is the one that protects health insurers at time of costly claims.
The permanent risk adjustment program is expected to act as a system to avoid insurers from selecting the healthiest members. Insurance firms that cover riskier, sicker people will get money from firms that have generally healthy members. This program is based on the risk score of a patient and the program is similar to the Medicare Advantage program.
However, some of the insurers now argue that the risk adjustment plan favors bigger players only. They also claim that the program leaves out some important prescription data. Though CMS has promised to make changes, many of the health plans insist that the changes are to be made quickly; else, some of the firms may have to close down if they are forced to pay under the 2015 risk adjustment plan.
ACA’s not-for-profit co-op, Evergreen Health Cooperative, recently sued the Federal government for their risk adjustment policies. The firm owes $24.2 million for a small group and individual health plans. As per the statistics, many other co-ops also have big risk adjustment obligations. In many of the states, many of the legacy carriers are on receiving end of the risk adjustment money, but this does not mean that all the large plans are benefited.
CMS, on the other hand, defended both the programs and said, “These correlations confirm that risk adjustment is working as intended to transfer funds from issuers with low actuarial risk to plans with high actuarial risk. Likewise, issuers with higher claims costs also received larger reinsurance transfers.”