CMS finalizes rule to provide $4.8 billion in 2018 risk-adjustment transfers

The Centers for Medicare & Medicaid Services today issued a final rule maintaining the current methodology for calculating risk-adjustment transfers in the individual and small group health insurance markets for benefit year 2018. CMS expects the rule to provide $4.8 billion in risk-adjustment transfers for benefit year 2018. The permanent risk-adjustment program, created by the Affordable Care Act, transfers funds from health plans with lower-risk enrollees to plans with higher-risk enrollees to spread the financial risk and help stabilize premiums. In February, a federal district court in New Mexico invalidated CMS’s use of the statewide average premium in the transfer formula for the 2014-2018 benefit years, pending further explanation of the agency’s reasons for operating the program in a budget-neutral manner. “Although the litigation is still pending, we are issuing this final rule to preserve the consistent, ongoing operation of the Risk Adjustment program for the 2018 benefit year,” CMS said. AHA had urged CMS to finalize the proposed rule as soon as possible.