Payments freeze muddies NH health insurance market

Rising premiums seen under ban on ACA insurer payments

Forty million dollars. That’s nearly how much Minuteman Health, the onetime health insurer, was supposed to give and the total three other insurers were supposed to get under the “risk adjustment” formula that was part of the Affordable Care Act, according to figures released by the federal government Monday.

But Minuteman is no more, put into receivership by the Massachusetts at the end of last year, and currently in liquidation proceedings – partly, if not mainly, because of that pending $39.4 million bill.

But that 2017 payment is now on hold, thanks to a conflicting court decision and the Trump administration’s decision to suspend risk adjustment payment in 2017 and the future. That affects some $10.4 billion worth of payments nationally. 

Such a decision could have kept Minuteman alive, but it could hurt the states’ three remaining health insurers, according to data released today by CMS. Harvard Pilgrim Health Care was supposed to receive $15.9 million; Centene (Ambetter or NH Healthy Families) was slated to get $14.4 million; and Anthem Blue Cross Blue Shield of New Hampshire would get $7.5 million. (Actually, Anthem’s individual plan unit would have received $8.9 million but its group plan unit would have given $1.4 million.) All this comes as the companies try to make crucial decisions about their participation in and rates for 2019 health exchange.

“This is new information, and we are evaluating its impact,” said Joan Fallon, spokesman for Harvard Pilgrim. “While we are committed to insuring that individuals have access to quality health coverage, this injects a level of uncertainty into the market that we and others will have to take into consideration going forward.”

Centene did not return a request for comment by deadline, and Anthem declined comment, but Justine G. Handelman, a senior vice president of the Blue Cross and Blue Shield Association – whose members were expected to receive $3 billion in 2017 – told The New York Times: “Any action to stop disbursements under the risk adjustment program will significantly increase 2019 premiums for millions of individuals and small-business owners, and could result in far fewer health plan choices. It will undermine Americans’ access to affordable care, particularly for those who need medical care the most.”

Market volatility

Under the Affordable Care Act, a risk adjustment formula is used to figure out how much insurers with healthier populations should pay to aid insurers with populations with more healthcare needs.

The question is whether the formula is fair. Minuteman, which paid out $36 million for 2015 and 2016, was one of a group of insurers that challenged it, contending that the formula penalized new and rapidly growing insurers that were not yet able to document the risk of new enrollees.

It “introduced volatility into the market,” said former Minuteman CEO Thomas Policelli.

Policelli wouldn’t comment on Minuteman’s situation, but “if you look around the country, it has punished lower-cost plans, causing them to leave, and rewarded higher-cost plans. As a result, you have far fewer insurance companies around today than in 2015 and 2016.”

In Minuteman’s case, the risk adjustment liability estimate ($41.3 million) accounted for slightly more than half of its $78.4 million in liabilities at the end of 2017, whereas its assets were $70 million.

By April, the liability amounted to nearly 80 percent of the company’s $54.3 million in liabilities. In fact, without the 2017 risk adjustment, Minuteman would not be $8.3 million in the red, but $32.7 million in the black.  If you include previous adjustments, the company would have had more than $100 million in the bank.

But a U.S. District Court judge in Massachusetts upheld risk adjustment at the end of last January, finding that the Centers for Medicare & Medicaid Services acted within its authority. But in February, a U.S. District Court judge in New Mexico invalidated it for 2014-18. CMS has challenged that ruling, asking for a reconsideration, but on July 6 CMS said it would suspend payments anyway, while “seeking a quick resolution to the legal issues raised and will inform stakeholders of any update to the status of collections or payments at an appropriate future date.“

Critics of the Trump administration say that this is all part of its attempt to undermine Obamacare.