A circuit court judge has sided with HHS over a payer's challenge to risk-adjustment rules, according to court documents filed March 17.
HHS' risk adjustment program is designed to spread the cost of risk among payers so that sicker-than-average patients can afford healthcare.
Once new rules were published in 2018, former Pasadena, Texas-based payer Vista Health Plan, challenged the implementation of the new rules and HHS' calculation of Vista's risk-adjustment charges. The small payer argued in the U.S. District Court for the Western District of Texas that it was assessed for risk-adjustment fees that exceeded its revenues, eventually leading to the company's dissolution.
The district court sided with HHS, and Vista appealed.
In the appeal, Vista argued that the new rules were "impermissibly retroactive" and should be vacated for failing to comply with HHS' public notice-and-comment procedures; the risk adjustment methodology held no rational basis and violated Vista's equal protection rights because of the company's size; and the risk adjustment charges were a "confiscatory regulatory taking."
Vista also claimed that the district court did not have jurisdiction over the case.
The U.S. Court of Appeals for the 5th Circuit reaffirmed the district court's decision and ruled that Vista's issues for appeal were due to harmless error by HHS or lacked merit altogether.