ACA insurers get class-action status in multibillion-dollar cost-sharing reduction lawsuit

The U.S. Court of Federal Claims granted class-action status for a health insurer's lawsuit against the U.S. government over its decision to end cost-sharing reduction payments, which helped insurers subsidize the cost of coverage for low-income Americans.

The 18-page opinion and order addresses a lawsuit filed by Common Ground Healthcare Cooperative, an insurer based in Brookfield, Wis. Common Ground's lawsuit claims insurers are entitled to CSRs under the ACA.

President Donald Trump's administration ceased the CSR payments to health insurers Oct. 12. The ACA established CSR payments to lower out-of-pocket expenses for Americans with household incomes between 100 percent and 250 percent of the poverty line.

In ceasing payment for CSRs, the attorney general concluded Congress didn't appropriate funds for the program. However, since insurers still needed to reduce out-of-pocket expenses like coinsurance and deductibles for lower-income Americans, some insurers raised premiums for health plans sold on the exchanges to offset the loss of CSRs.

While the class-action status is an incremental part of the lawsuit, the designation is a big win for insurers. If insurers prevail with their lawsuit, the federal government would owe billions of dollars in CSR payments, despite the fact many insurers have mitigated their loss of CSR payments through higher premiums.

Nicholas Bagley, a law professor at Ann Arbor-based University of Michigan, tweeted April 19 that "the class-certification decision will surely be appealed, and the court's tentative conclusion about mitigation will be revisited. So it's not the end of the road. But it's safe to say that insurers had a very good day in court."

More articles on payer issues:
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Humana deploys national maternity bundled payment model with 5 OB-GYN practices

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