Dive Brief:
- The U.S. Department of Justice has asked the U.S. Supreme Court to dismiss payer lawsuits seeking roughly $ 12.3 billion in federal risk corridors payments, which were meant to level the playing field for insurers in the Affordable Care Act’s individual marketplace.
- According to a claim filed by DOJ officials Wednesday, the Trump administration doesn’t have to shell out the payments because Congress required the Affordable Care Act to be budget-neutral.
- The government redistributed profits from insurers with lower-than-expected claims to those with higher-than-expected claims. However, Congress has suspended the government’s obligation to pay insurers each year, setting off a wave of industry pushback.
Dive Insight:
Participating in the ACA’s exchanges has always been a challenge for insurers, especially in the early days of the law. Political and regulatory issues and payer unease all contributed to uncertainty surrounding the long-term stability of the exchanges.
Risk-sharing programs like the law’s temporary risk-sharing corridors payments were meant to alleviate payer qualms about jumping into the individual market.
But Republicans opposed to the ACA in Congress delayed the payments in 2015 and 2016, causing many health insurance co-ops to close. Others made up for the lack of the payments by raising premiums or other strategies. That bet that may have paid off, given evidence this week the individual markets saw profitability in 2018 that may have exceeded even pre-ACA levels.
Still, payers have not stopped trying to get payments they see as rightfully theirs. Their efforts have been mired in legal quicksand for years.
The most recent action in the litigation came in June, when a federal appeals court ruled HHS isn’t obligated to pay the risk corridors money in a suit brought by payer Moda Health, which sells plans in Oregon, Washington and Alaska.
According to the three-judge panel, HHS’ initial obligation to issue the payments was negated by subsequent Congressional appropriations riders requiring net risk corridors payments to be budget neutral.
Four insurers petitioned the Supreme Court to hear the appeal in February: Moda Health, Blue Cross Blue Shield of North Carolina, Land of Lincoln and Maine Community Health Options. In March, a variety of industry stakeholders filed amici briefs backing the appeal, including America’s Health Insurance Plans, the Blue Cross Blue Shield Association and the U.S. Chamber of Commerce.
According to the government, more insurers were owed money than the fund had available. This is why HHS has not been able to fully reimburse the payers. Only 15% of insurers had low enough costs to enable them to pay into the program, which wasn’t enough to cover the roughly 70% of payers that were considered high-cost.
“The net effect was a bait-and-switch of staggering dimensions in which the government has paid insurers $ 12 billion less than what was promised,” Moda Health lawyers argued in their petition.
Now that the government filed its brief, the insurers have one more opportunity to respond before the Supreme Court decides whether to take the appeal.