- Numerous small health insurers once again will be required to pay major sums of money into the Affordable Care Act's risk-adjustment program, new CMS data revealed last Thursday.
- The results for 2015 marked the second year of the risk adjustment program, and second time some smaller insurers will be taking a devastating hit from the program intended to help protect insurers from high ACA losses by spreading money from those with healthier populations to those with sicker populations.
- Some small insurers, including co-ops, have argued the program inadvertently provides an advantage to larger and more established insurers compared to their smaller or newer rivals.
The impact of the 2015 data was recently illustrated by one small insurer, Maryland's Evergreen Health co-op, which sued the federal government over its current risk-adjustment formula. Though CMS has indicated it will modify the formula by 2018, Evergreen argued it's too late for those insurers who are feeling the pinch now and for whom the program could make or break their year.
The insurer is attempting to block the government from requiring it to pay $22 million for its 2015 risk adjustment share, which comes to 26% of its $84 million premium revenue for that year -- while its largest competitor will be receiving payments.
According to the CMS data, 817 insurers participated in risk adjustment for 2015. Several of the other 10 remaining co-ops are also being hit hard for 2015, noted Modern Healthcare: Land of Lincoln Health in Illinois owes $31.8 million; New Mexico Health Connections owes $14.6 million; and HealthyCT in Connecticut owes $13.4 million. In another example, startup Oscar Insurance owes $33 million for its 2015 plans in New Jersey and New York.