Nonprofit Sues Feds Over Health Care Risk Payments

Aug 15, 2018

A New Mexico nonprofit health insurance company is suing the federal government for a second time over regulations it says drive up insurance premiums and threaten smaller insurers.

When the Affordable Care Act passed, Congress tried to even the playing field in the new insurance market. They set up a system of payments so that, in theory, competing plans wouldn’t sink or swim based on how many sick or healthy people enrolled.

New Mexico Health Connections argues that system has failed.

NMHC Chief Executive Officer Marlene Baca says the nonprofit has lowered its costs by working efficiently, doing more patient outreach, and focusing on prevention, like helping patients find primary care doctors insteading of making repeated trips to the emergency room.

“When you compare our ER rates to other health plans, we have much lower rates," said Baca.

Even so, NMHC was made to pay out millions to bigger companies like Blue Cross Blue Shield New Mexico – which, the lawsuit says, forced the nonprofit to hike up its premiums.  

These "risk adjustment" payments have led to the forced shutdown of similar small, start-up insurance plans in at least eight other states, the court filing notes.

In 2016, NMHC filed suit against the federal government over the way risk adjustment payments are calculated.

In February, a federal court threw out those rules and ordered the U.S. Department of Health and Human Services to fix them. The lawsuit filed Monday says the feds ignored that order for months, and that when they finally issued a new rules in July, they didn’t allow time to hear from the public, as required by law. 


Support for KUNM’s Public Health New Mexico project comes from the W.K. Kellogg Foundation, the McCune Charitable Foundation, the Con Alma Health Foundation, and from KUNM listeners.