The idea is to remove the financial incentive for insurers to "cherry-pick" healthier customers.
CMS provided a timeline, noting that after the February 28 decision by the New Mexico federal court, it filed a motion for reconsideration, and on June 21 the court held a hearing on it. CMS is waiting for the court's ruling, it said.
Under the risk adjustment program, insurers with healthier patients pay those with sicker patients.
Insurance companies responded quickly on Saturday with their disapproval.
The Congressionally mandated risk adjustment program of the Affordable Care Act redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees, helping to ensure that sicker individuals can receive coverage by sharing the cost of covering them.
"So much uncertainty put in the market at this point of time is very unnerving", said Ritu Agarwal, senior associate dean of research at the University of Maryland Robert H. Smith School of Business, who follows the health care system. "It will undermine Americans' access to affordable care, particularly for those who need medical care the most".
Still, insurers are grappling with changes that the Trump administration and Congress have made to Obamacare for 2019.
FILE PHOTO: A man fills out an information card during an Affordable Care Act outreach event hosted by Planned Parenthood for the Latino community in Los Angeles, California September 28, 2013.
Democrats, meanwhile, are seizing on the unexpected action by characterizing it as another example of the administration sabotaging ObamaCare, a key Democratic message heading into the November midterm elections. Last month the Department of Justice decided not to defend the law in a court challenge in Texas, jeopardizing the part of the law that protects people with pre-existing conditions from being denied coverage, as NPR reported. About $10.4 billion was slated to be transferred previous year.
Legal experts said there were several ways the administration could have dealt with the situation, without going so far as to suspend the program. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS administrator Seema Verma reportedly said in a statement.
"The Trump administration just keeps pushing their destructive repeal-and-sabotage agenda, no matter the cost to the American people", the statement reads.
Some health care experts, however, believe that risk adjustment has caused more damage than good and needs urgent fixing.