BOSTON (SHNS) -.With millions of health insurance dollars in the balance, state regulators are working with federal officials on implementation of an Affordable Care Act provision that has pitted the largest insurer in Massachusetts against its smaller competitors.
Part of President Barack Obama’s signature health reform law, risk adjustment requirements aim to remove any advantages a health plan might gain by insuring a relatively healthy population and thereby discourage plans from marketing exclusively to healthy people.
Earlier in March the state Health Connector Authority proposed phasing in a risk adjustment program, which will ship dollars from smaller insurers in the small group and individual market to Blue Cross Blue Shield.
The Massachusetts Association of Health Plans said that all of its members in that market will have to pay and Blue Cross Blue Shield of Massachusetts is the only other insurer in that market.
“To have risk adjustment be a boon for any individual plan and destabilize the marketplace is really counter to the goal of risk adjustment,” said Eric Linzer, vice president of public affairs and operations for the insurers’ association. He said, “I think it has the potential for some serious financial concerns for health plans and for the competitiveness for the marketplace.”
On March 6 Connector officials discussed a proposal to phase in the risk adjustment payments, which begin June 30 and are based on data from calendar year 2014. According to the health plan association, which supports the proposal, Connector officials discussed splitting in half the pool of money that would be adjusted in the first year, bringing it down to $52 million. The risk adjustment pool would then scale up, reaching 100 percent by June 30, 2018.
Connector spokesman Jason Lefferts said the federal Centers for Medicare and Medicaid Services “has conveyed concern with any changes to our risk adjustment approach, and no final decisions have been made.”
In written testimony to the Connector, Blue Cross insisted that the state “must move forward with full and complete payments,” which were relied on when rates were set.
According to Blue Cross’s 2014 annual statement, which was obtained by the News Service, the insurer anticipated $49.5 million from risk adjustments payments – which is a little less than the $52 million the Connector discussed providing under the phased-in approach. Blue Cross said it used a conservative approach in estimating the revenue.
Blue Cross noted it experienced in 2014 an operating loss of $118 million and said anything other than full implementation would exacerbate its finances.
“Any changes in Risk Adjustment would result in severe financial losses at a time when [Blue Cross of Massachusetts] is already experiencing adverse financial effects,” wrote Michael Caljouw, vice president of state government and regulatory affairs for Blue Cross.
In a statement to the News Service, Blue Cross spokesman Jay McQuaide said, “This isn’t about Blue Cross; it’s about our collective obligation to provide insurance coverage to the sickest among us. That means providing coverage to individuals with serious medical conditions. One of the pillars of health reform is that everyone gets treated the same whether they are sick or not and risk adjustment is the way the ACA makes that possible.”
Linzer said the smaller health plans his organization represents have the same obligation to “take on individuals with significant chronic conditions and significant medical issues.”
Senate Chairman of the Committee on Health Care Financing James Welch said the Baker administration is in discussions with the federal government and said he expects that stakeholders will work on arriving at a solution.
“The key is to try and get everybody to the point where they’re discussing alternatives if that’s necessary,” the West Springfield Democrat told the News Service. He said, “Obviously the federal government’s going to play the ultimate determining role.”
Linzer noted Obama has discussed making future changes to better the law, and he reiterated concerns the group has about the accuracy of data used this year. Linzer also said the risk adjustments could have an “adverse” effect on some of the wellness efforts undertaken by health plans to improve the overall health of the population they serve.
Health Care for All researcher Brian Rosman said risk adjustment is a “matter of fairness to level the playing field,” though the group also wants to avoid “unintended consequences,” such as those raised by association of health plans. He said the group hasn’t taken a position on the phase-in proposal.
Copyright 2015 State House News Service