The payments also were meant to try to prevent insurers from cherry-picking healthier patients to keep costs down. Unlike with other ObamaCare subsidy programs, risk adjustment payments shuffle money from insurers with relatively healthy populations to others.
Late a year ago, it said it would halt so-called cost-sharing payments, which offset some out-of-pocket healthcare costs for low-income patients.
"The federal government's decision to suspend payment transfers under the ACA's risk adjustment program could have a significant impact on premiums and place an additional burden on people in the community who can least afford it", CareFirst's president and CEO, Brian Pieninck, said in a statement.
America's Health Insurance Plans (AHIP), a national association representing health insurers, said in a statement that it was "discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments", adding that it will "create more market uncertainty". Having a risk adjustment program factors into these calculations.
The mainstream media report offered more criticism from supporters of the Affordable Care Act. The program is based on a patient's risk score, which is determined by a person's demographic information and health condition.
CMS said in a statement that the funds were being cut because people are more familiar with the exchange program, and that the programs enrolled less than 1% of participants previous year.
A federal court in MA upheld the same allocation formula in January.More news: Pogba dedicates France semi win to rescued Thai boys
Seema Verma, administrator of the Centers for Medicare and Medicaid Services, listens during a meeting on healthcare reform at the White House.
The court's ruling bars the agency from collecting or making payments under the current methodology, which uses a statewide average premium, said CMS, which is part of the Department of Health and Human Services. The Maryland Insurance Administration has a hearing scheduled for July 31.
The Trump administration's move "will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", association president Scott Serota said in a statement. Trump tweeted dozens and dozens of times about Obamacare and its demise past year as he pushed the Senate to repeal the law.
CMS was referring to a February ruling from a federal court in New Mexico that invalidated the risk adjustment formula, and a January ruling from a federal court in MA that upheld it. "It will undermine Americans' access to affordable coverage, particularly those who need medical care the most".
At stake are billions in payments to insurers with sicker customers.
But CareFirst and Kaiser could ask to adjust their rates higher given the Trump administration's decision.