The so-called "risk adjustment" program takes payments from insurers with healthier customers and redistributes that money to companies with sicker enrollees.
This risk adjustment program was created to "stabilize" the insurance markets by making sure that there were several companies in each market vying for customers, thus theoretically keeping premiums reasonable.
Critics said it was just the latest example of the Trump administration undermining the ACA and harming consumers who purchase individual policies.
"Costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.
The program is critical to markets under the Affordable Care Act because insurers with healthier consumers enrolled in plans reimburse insurers with sicker and more expensive enrollees.
For years, Molina and other insurers have complained that the risk-adjustment program unfairly rewarded many Blue Cross Blue Shield plans that had excess administrative costs and higher premiums.
Democrats say that the cuts are more evidence of Trump officials sabotaging the health law. America's Health Insurance Plans said it was "very discouraged" by the CMS' decision, which comes as insurers determine their premiums for 2019 and states review those proposals.
In the MA case, however, a federal judge upheld the Obamacare formula, the Journal reports.
In a separate statement, the CMS said it was "disappointed" by the court's ruling, adding that "billions of dollars in risk adjustment payments and collections are now on hold".
The U.S. agency that administers Obamacare is freezing payments to insurers that cover sicker patients, saying a federal court ruling ties its hands.
Insurance companies responded quickly on Saturday with their disapproval. The Maryland Insurance Administration has a hearing scheduled for July 31.
"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices".
President Donald Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress a year ago failed to repeal and replace the law propelled by Democratic President Barack Obama. Paying off companies that lose money was supposed to be a temporary adjustment to changing markets.
In its announcement, CMS said the private sector is more cost-effective, so people looking for health coverage should be encouraged to go to insurance agents and brokers (who may receive a commission, unlike navigators).
The outcome of the decision could send premiums soaring and insurers running for the exits on the ACA exchanges.