As the Federal Government announced plans to do away with the health insurer risk adjustment program, Governor Cuomo said that New York State would consider setting up its own program. The program was originally designed to transfer risk from plans that insure sicker members to those with healthier ones as a means of stabilizing the health insurance market and pricing.
Crain’s New York reports: “NY may set up its own risk-adjustment program” - The Cuomo administration said Monday that it would consider setting up its own risk-adjustment plan for health insurers. The announcement follows a decision to halt the federal program, which transfers money to plans that sign up sicker members from those with healthier ones. Gov. Andrew Cuomo said he directed the state Department of Financial Services to set up an "affordable health-access action plan" to mitigate potential increases in premiums. The Centers for Medicare and Medicaid Services said Saturday it would suspend payments while it sought to resolve federal litigation concerning its methodology. A spokeswoman for the state Health Plan Association said the group was awaiting more information on the state's plans. "Ensuring the stability of the marketplace is critical to protecting the individual and small-group markets," said Eric Linzer, HPA's president and CEO. "We appreciate the governor's focus to examine potential approaches in response to CMS' announcement." DFS previously tinkered with risk-adjustment payments after they resulted in major shifts of fortune for certain plans. It issued an emergency regulation for the small-group market in 2016, allowing the state to adjust payments by up to 30% for the 2017 plan year. The federal government is withholding the payments tied to 2017, which are worth $10.4 billion nationwide. UnitedHealthcare's Oxford could be negatively affected if the federal government doesn't quickly resume the payments. For the 2016 plan year, its Oxford Health Plans division received $79 million from the program, while Oxford Health Insurance received $254.9 million in the small-group market. A United spokeswoman did not respond to a request for comment. —J.L.