Humana sues CMS for $600M+ in risk corridors payments

Humana filed a lawsuit against CMS to recoup more than $600 million in risk corridors payments it claims to be owed under the ACA, according to an Insider Louisville report.

Humana's lawsuit, filed in the U.S. Court of Federal Claims, alleges CMS lured insurers to sell policies on public exchanges under false pretenses. Specifically, the insurer argues CMS failed to follow through with the ACA's risk corridors payments, which help offset costs associated with covering high-risk members.

Under the temporary risk corridors program, which ran from 2014-16, the government collected payments from insurers if their premium revenue outpaced claims costs by a certain amount. The government then redistributed the payments to insurers whose premium revenue was lower than claims costs by a certain amount.

However, the government fell short on the payments in 2014, when it collected $362 million in risk corridors payments but owed $2.87 billion to struggling payers, according to the report. CMS predicts the shortfall will continue for the 2015 and 2016 plan years.

"The government's failure to make full and timely risk corridors payments … is a material breach of the implied-in-fact contract, and (Humana) has been damaged by this failure," the lawsuit reads, as cited by Insider Louisville.

In its lawsuit, Humana claims CMS owes Humana $244 million for 2014, $214 million for 2015 and $191 million for 2016, the report states.

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