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New Mexico Health Connections Files Suit Against Federal Government

Commentary: New Mexico Health Connections filed a lawsuit challenging the Centers for Medicare & Medicaid Services’ (CMS) issuance of an emergency regulation for the ACA risk adjustment program for 2017. At the same time, Health Connections also filed an immediate motion for a summary judgment asking the court to take expedited action to strike down the emergency rule. This is because CMS violated the federal Administrative Procedure Act and the US Constitution by rushing out a regulation that imposes millions of dollars of penalties upon Health Connections without following a legal requirement to receive public comments and input first. In the past two years, three courts around the country have struck down other CMS regulations for similarly denying the public’s right to notice and comment on proposed rules.

“We want to ensure that HHS follows the legal process as outlined in the Administrative Procedure Act,” said Marlene C. Baca, CEO for New Mexico Health Connections. “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. We support the concept of fair and equitable risk adjustment and we will continue to fight to protect consumers and provide fair insurance rates.” 

Under CMS’s 2017 formula, Health Connections now owes millions in risk adjustment charges even though (as measured by CMS’s risk scores for New Mexico) its individual insurance market enrollees were slightly sicker than the state average, and its small group market enrollees were only one percent healthier than the state average. Health Connections’ enormous risk adjustment bill is not a result of enrolling healthier members, but because its small group premiums were 22 percent below the state average. CMS is exacting this unfair financial penalty against Health Connections for lowering prices to small businesses and consumers and making healthcare more affordable for New Mexicans.

Health Connections has been challenging this arbitrary and punitive risk adjustment program for years. After CMS refused to listen to its concerns, Health Connections was forced to file legal action in the Summer of 2016. In February 2018, the court in that case vacated the risk adjustment regulations from 2014-2018. Rather than use the court’s ruling as an opportunity to engage with small plans like Health Connections and reform their program, CMS instead ignored the court’s ruling for five months and then issued a new regulation reusing the same formula without giving Health Connections and other members of the public a chance to be heard. 

Health Connections remains committed to fighting to make the ACA work better for New Mexico’s consumers and small businesses by pushing CMS to reform the risk adjustment system that penalizes quality, efficiency, care management, and lower prices for New Mexicans.

The two NMHC filings can be found on the NMHC http://mynmhc.org/in_the_news.aspx at Complaintand Summary Judgement