Last week, the Centers for Medicare and Medicaid Services (CMS) released its report on the Affordable Care Act’s (ACA) transitional reinsurance payments and permanent risk-adjustment transfer programs for benefit year 2015. The programs, which are both intended to transfer pooled funds from plans with lower-risk customers to those with higher risk, are two of the ACA’s “three R” premium stabilization programs.
As of now, CMS estimates the reinsurance program will pay out around $7.8 billion to 497 insurers nationwide.
Although on average, small and large insurers received similar risk-adjustment transfers, there was more dispersion among smaller payers.
Insurers that are receiving some of the largest reinsurance payments include:
- Blue Cross of California: $325 million;
- Kaiser Foundation of California: $194 million;
- Blue Shield of California: $282 million;
- Blue Cross and Blue Shield of Florida: $204 million; and
- Humana of Florida: $137 million.
Payers that are receiving some of the largest risk-adjustment payments in the individual market include:
- Blue Cross and Blue Shield of Florida: $369 million;
- Blue Shield of CA: $182 million;
- Health Net of California: $126 million;
- Blue Cross and Blue Shield of Michigan: $84 million; and
- Oxford Health Plans (NY): $76 million.
Insurers that are receiving some of the highest risk-adjustment payments in the small group market include:
- Oxford Health Insurance, Inc. (NY): $315 million;
- Blue Cross of California: $99 million;
- Horizon Healthcare Services, Inc. (NJ): $37 million;
- Anthem Health Plans of Virginia, Inc.: $28 million; and
- Aetna Life Insurance Company (CA): $27 million.
Those paying the most into the risk-adjustment program in the individual market include:
- Molina of Florida: $219 million;
- Humana Medical Plans of Florida: $135 million;
- Coventry of Florida: $111 million;
- Kaiser Foundation of California: $82 million; and
- Preferred Medical Plan, Inc. of Florida: $63 million.
Some who got hit hardest in the small group market include:
- Health Republic (NY): $154 million;
- Aetna of New York: $93 million;
- Kaiser of California: $87 million;
- Aetna Health of California Inc.: $56 million; and
- Health Insurance Plan of Greater New York: $36 million.
How co-ops fared
Many of the still-existing co-ops will pay millions to the risk-adjustment program. However, a few will also be receiving substantial reinsurance payments.
Here’s where some of the co-ops stand:
- Common Ground Heathcare Cooperative (WI): Owed: $1.86 million / To receive: $32.2 million;
- CoOportunity Health (IA): Owed: $5.3 million / To receive: $520,7400;
- Freelancers Co-Op of NJ: Owed: $46 million / To receive: $25.5 million;
- HealthyCT: Owed: $13.4 million / To receive: $11.4 million;
- Land of Lincoln (IL): Owed: $31.8 million / To receive: $18.1 million;
- Maine Community Health Options: Owed: $1 million / To receive: $40.9 million;
- New Mexico Health Connections: Owed: $14.6 million / To receive: $5.5 million; and
- Montana Health Cooperative: Owed: $6.6 million / To receive: $7 million.
Risk-adjustment program under fire
Many payers believe the risk-adjustment program is biased toward larger insurers. The smaller payers have argued that they are being unfairly penalized for having healthier patient pools; they say in reality they just don’t have as much claims data. MD-based Evergreen Health Cooperative is suing the federal government over this issue.
In its report, CMS says that both programs “are working as intended in compensating plans that enrolled higher-risk individuals.” Thereby, they are protecting insurers against adverse selection and “supporting them in offering products that serve all types of consumers.”
Regardless, CMS is proposing some upcoming changes to the risk-adjustment program. First, the model would include an adjustment factor for partial-year enrollees beginning in 2017. Second, prescription drug utilization data would be incorporated into risk adjustment. That would begin in 2018.