In win for big payers, appeals court sides with HHS in risk adjustment case
A federal appeals court ruled in HHS’ favor this week, finding nothing wrong with the formula used to calculate billions in risk adjustment payments under the Affordable Care Act.
The ruling reverses a lower court decision that came to the opposite conclusion and found the formula was arbitrary and capricious. The lower court delivered a win to New Mexico Health Connections, a health insurance co-op, which initially filed the suit against HHS.
In this latest 3-0 decision, the three-judge panel of the U.S. 10th Circuit Court of Appeals found HHS “acted reasonably” in calculating the formula.
The lower court ruling created uncertainty within the insurance industry, especially after CMS temporarily froze the payments following the court’s ruling, drawing criticism from the insurance industry lobby that said the disruption would drive up premiums for consumers.
This week’s ruling provides more certainty for insurers that rely on the funding. For more, click here.
This is an important decision because it shows that risk adjustment is not going anywhere and health plans need to learn all that they can about RA. Additionally, if you don’t have the right systems and processes in place to support your CMS submissions, you could be in danger of leaving money on the table.