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CMS Adopts the Methodology for the Permanent Risk Adjustment Program

Posted on Thursday, July 26, 2018 5:59 PM

This week, CMS announced its final rule that reissues, with additional explanation, the risk adjustment methodology previously established regarding 2017 benefit year.  This important step fills a void created by a federal district court’s vacating of the previously issued methodology and enables the agency to resume the CMS-operated risk adjustment program in the individual and small group markets. 

The Patient Protection and Affordable Care Act (PPACA) created a permanent risk adjustment program that provides payments insurers who cover higher-risk populations that is funded by payments from lower-risk populations, reducing the incentives for insurers to avoid higher-risk enrollees.

“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.  “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.”    

Click here for the press release.


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