July 8 (UPI) -- President Donald Trump's administration is freezing billions of dollars in payments to health insurers under the Affordable Care Act's risk adjustment program.
The Centers for Medicare and Medicaid Services, which oversees the ACA program, announced Saturday that a federal court ruling prevents CMS from making further collections or payments under the risk adjustment program, including an expected $10.4 billion for the 2017 benefit year.
"We were disappointed by the court's recent ruling. As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold. CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets," said CMS Administrator Seema Verma.
The U.S. Court for the District of New Mexico ruled the methodology used by the federal government to collect the payments was "arbitrary and capricious."
CMS plans to appeal the court's ruling, as the U.S. District Court for the District of Massachusetts ruled to uphold the payments.
"CMS is 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," the agency said.
America's Health Insurance Plans, the trade organization representing health insurers, issued a statement saying it was "discouraged" by the decision to freeze risk adjustment payments.
"This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own. It will create more market uncertainty and increase premiums for many health plans -- putting a heavier burden on small businesses and consumers, and reducing coverage options. And costs for taxpayers will rise as the federal government spends more on premium subsidies," the group said.