Health insurers gear up for legal battle over ACA payments

Five health insurers have sued the federal government since February to recoup payments owed under the Affordable Care Act's risk corridor program. Now, several other insurers are framing up their lawsuits over the ACA program, according to The Hill.

The risk corridor program is designed to temporarily level the financial playing field for payers by limiting both unexpectedly high gains and losses associated with participating in a new insurance market. Insurers that saw greater profits paid into a pool to compensate insurers with higher losses. The three-year program, which runs through 2016, fell short by more than $2.5 billion in its first year because so many insurers experienced losses in the individual market.Due to the shortfall, HHS said insurers initially would only receive 12.6 percent of the money claimed under the risk corridor program for 2014.

In February, Health Republic Insurance Co. brought a $2.5 billion claim against the federal government concerning risk corridor payments. Since then, Highmark — the insurance arm of Pittsburgh-based Highmark Health — Land of Lincoln Health, Blue Cross and Blue Shield of North Carolina and Moda Health have sued the federal government over risk corridor payments.

According to The Hill, New Mexico Health Connections, the state's insurance co-op, is working with lawyers to draft lawsuits challenging the risk corridor program as well as the ACA's risk adjustment program.

The risk adjustment program transfers funds from plans with lower-risk enrollees to those with higher-risk enrollees. The ACA prohibits risk selection by insurers, and the risk adjustment program reinforces those rules. Under the risk-adjustment methodology, New Mexico Health Connections owes CMS $16.4 million, which is more than the company expected to owe, according to The Hill.

If New Mexico Health Connections files suit over the risk adjustment program, it will be the second insurer to do so. Maryland co-op Evergreen Health sued the federal government in June over the $24.2 million it owes under the program.

New Mexico Health Connections CEO Martin Hickey, MD, told The Hill that several other insurers in different states are planning to file suit over the ACA programs but declined to identify the other insurers.  

More articles on payer issues:

Narrow networks fuel provider, insurer billing fights
Majority of Ohio marketplace consumers to receive subsidies
Conn. senator urges Cigna, Aetna to stay in state

 

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