- Evergreen Health filed suit Monday against CMS over the controversial risk adjustment program of the Affordable Care Act, which reallocates money from insurers with the healthiest populations to those with the sickest in an effort to stabilize the health insurance markets.
- Evergreen has long argued the program’s current formula for scoring risk actually destabilizes the markets because it inadvertently favors the largest and wealthiest insurers over the smaller, newer entrants.
- The lawsuit aims to prevent the government’s risk adjustment collection from Evergreen of approximately $22 million, or 26% of its $84 million in 2015 premium revenue.
The formula has drawn criticism since it became apparent new/small insurers were typically paying out to large ones, alongside arguments that large insurers were using their financial resources and expertise to better manipulate their scores.
"Large insurers are spending hundreds of millions of dollars -- money that smaller insurers simply do not have -- to 'chase' the health condition codes that are used to compute each insurer's risk adjustment score," Evergreen CEO Peter Beilenson stated, noting in Maryland, the state's largest insurer can expect to receive risk adjustment payments from possibly all of the state's other insurers under the current formula.
Evergreen has been advocating risk adjustment changes for some time, and the CMS has taken some action on improving risk score credibility, as well as promising some modifications to the formula by 2018--but that's too late, Beilenson argued.
"Too much is at stake to wait until then. Changes must be made right now," he argued.