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Blue Shield Lauds Reinstatement of Risk Adjustments as Good for ACA Market

Blue Shield of California welcomed a Trump administration decision on Tuesday to reinstate a payment program between health insurers. The payments are intended to stabilize the health-care market as part of the Affordable Care Act.

The so-called “risk-adjustment” payments had been frozen three weeks ago after a federal judge in New Mexico ordered the government to explain its reasoning for the way it calculates the payments. The judge is overseeing a case brought by a small health organization in New Mexico challenging the program which is run by the Centers for Medicare and Medicaid Services (CMS).

Blue Shield of California is one of the biggest participants in the program.

“This decision is good for the market,” said Gary Cohen, vice president of government affairs at Blue Shield California. “These payments even the playing field for insurers allowing more choice for consumers while keeping rates manageable. Blue Shield of California depends on this program to offer a range of affordable plans through Covered California.”

The decision by CMS comes amid a politically turbulent time for ACA. A congressional effort to repeal the ACA last year failed. But the requirement for individuals to purchase health insurance or pay a penalty was dropped. The risk-adjustment payments are seen by the industry as critical for ACA.

“This rule will restore operation of the risk adjustment program, and mitigate some of the uncertainty caused by the New Mexico litigation,” said CMS Administrator Seema Verma in a statement.  “Issuers that had expressed concerns about having to withdraw from markets or becoming insolvent should be assured by our actions today.  Alleviating concerns in the market helps to protect consumer choices.”

Under the rule, insurers that enroll healthier patients pay insurers that have less-healthy customers. The program is intended to discourage insurance companies from cherry picking the healthiest customers. Blue Shield received $556 million through program last year. It is not a subsidy and there are no federal dollars spent.

Read the CMS rule

See coverage in The New York Times