Dive Brief:
- A clash took place last Friday between Republican lawmakers and CMS acting Administrator Andy Slavitt regarding CMS' decision to prioritize reinsurance payments to insurers over required payments to the U.S. Treasury, FierceHealthPayer reports.
- The argument, spearheaded by Rep. Tim Murphy (R-PA), took place during a hearing of the House Committee on Energy and Commerce, which is describing the decision online as the "unlawful" diversion of $3.5 billion from taxpayers to insurance companies.
- In contrast, Democratic committee ranking member Rep. Frank Pallone Jr. sided with Slavitt and accused Republicans of engaging in "overblown rhetoric" against the reinsurance provision of the Affordable Care Act.
Dive Insight:
While the attacks questioned CMS' officials relationship with insurers and the use of the reinsurance program to prop up the ACA, the issue comes down to how CMS handled its dual obligations.
Under the reinsurance program, CMS was required to use its contributions from insurers to provide payments to those insurers that enrolled high-risk individuals, and to provide a portion of the payments to the U.S. Treasury. The committee hearing argued the statute specifically requires a portion of the contributions to be deposited and not be used for the reinsurance program.
However, as Slavitt stated, CMS issued a new regulation in 2014 that established in the event of a shortfall, the agency would allocate the contributions first to the reinsurance payment pool. "All comments CMS received were supportive of the proposed policy," he argued, and the change was made to maximize the impact of the reinsurance program and its stabilizing effect during the early years of the ACA.