After freezing risk adjustment payments earlier this month, CMS has issued a final rule saying they will continue risk adjustment payments to insurances under the Affordable Care Act.[1]

In simple terms CMS had originally said it was going to wait for a court ruling on risk adjustment payments before paying out insurers for 2017 and would freeze payments from here forth until a ruling came in. However, they have reversed this after learning the ruling would not be made in time and the freeze would cause some insurers to raise rates or flee the market.

In response to this CMS has issued a final rule securing payments for 2017 and for years moving forward.

To get the full story in CMS’s own words, see: CMS Adopts the Methodology for the Permanent Risk Adjustment Program under the Patient Protection and Affordable Care Act for the 2017 Benefit Year.

NOTE: Risk adjustment payments come from a provision of the Affordable Care Act that distributes funds to insurers who end up with more sick and costly customers. The idea being that since insurers can’t discriminate based on pre-existing conditions under the ACA, this provision helps incentivize insurers to offer plans in all markets and helps to offset the risk of taking on a disproportionate amount of sick people. Without the provision insurers would need to price in the risk. Although the government makes these payments, taxes on insurers and health plans help offset these costs in theory.

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