October 14, 2015

Health Insurers Stuck With Bill as CMS Falls Short on Risk-Corridor Payments

Health plans burdened with more costly enrollees will not receive the government assistance they expected, according to a recent announcement from the Centers for Medicare and Medicaid Services (CMS). As explained in Inside Health Insurance Exchanges, the Affordable Care Act’s (ACA) risk-corridor program “was designed to shield carriers that wind up with a disproportionate share of costly enrollees” by compensating them for “any shortfall if carriers paid less money into the program than they requested.” However, CMS announced that it will meet only 12.6 percent of risk-corridor payment requests for 2014 claims, citing budget constraints. Mike Adelberg, senior director for FaegreBD Consulting, said the size of the payment deficit is surprising even for health providers with modest expectations.

“While most insurers were expecting a shortfall on their risk corridor payments, this is still jarring,” Adelberg said.

CMS plans to pay out the remainder through risk-corridor collections in 2015 and, if necessary, 2016.

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