A New Mexico insurer in the midst of a legal battle with the federal government over risk adjustment payments has asked a court to strike down a rule that reinstated $10.4 billion in payments for 2017.
In a complaint (PDF) filed in the U.S. District Court in New Mexico, New Mexico Health Connections (NMHC) claims the Department of Health and Human Services violated the Constitution and the Administrative Procedure Act (APA) by failing to provide a comment period when it issued a final rule reinstating the risk adjustment program for 2017.
The insurer also filed an immediate motion for summary judgement (PDF) requesting the court take expedited action to strike down the rule releasing the risk adjustment payments under the same formula. Broadly, NMHC contends the existing formula unfairly punishes smaller insurers with sicker patients.
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In issuing its rule, HHS waived the mandated comment period, arguing that “immediate administrative action is imperative to maintain the stability and predictability in the individual and small group insurance markets.” In its court filing, NMHC says “none of these assertions hold water” adding that “similar excuses have been rejected by the courts time and time again.”
NMHC also points out that HHS had the opportunity in February to issue a new rule after a New Mexico judge ruled the agency must provide additional justification for its risk adjustment formula, but “did nothing” for four months.
The Centers for Medicare & Medicaid Services (CMS) suspended $10.4 billion in risk adjustment payments owed to insurers in July, citing the judge’s decision and the agency’s pending request for reconsideration. Weeks later, the agency issued the emergency rule that reinstated the payments and maintained the same formula.
“We want to ensure that HHS follows the legal process as outlined in the Administrative Procedure Act,” Marlene C. Baca, CEO for NMHC, said in a statement. “We contend that the emergency regulation continues a risk adjustment formula that disadvantages small, new, and lower-priced health plans in favor of their larger, more expensive competitors.
"The CMS formula does not, as it is supposed to, transfer funds equitably from health plans with healthy enrollees to health plans with sick enrollees," she added. "We support the concept of fair and equitable risk adjustment and we will continue to fight to protect consumers and provide fair insurance rates.”
CMS and NMHC are awaiting a judge’s decision on the government’s request for reconsideration. That decision is expected by the end of the month.