Federal administration sends mixed messages concerning ACA payments
On the one hand, the Centers for Medicare and Medicaid Services (CMS) has indicated it wants to settle the claims, while the Department of Justice is vigorously contesting them in court, according to a research fellow at George Mason University’s Mercatus Center.
The confusion centers on risk corridor payments, part of a three-year program under Obamacare that was supposed to move money from insurers with low-expense customers to those with much higher expenses.
However, in 2014, the amount taken in was just under $400 million, but claims totaled $2.9 billion because so many plans incurred higher expenses than expected.
Six insurance plans have sued for payments totaling hundreds of millions. The justice department last Friday filed a motion asking for lawsuits filed by two plans to be dismissed.
This followed a Sept. 9 memo issued by the Department of Health and Human Services (HHS) indicating it is willing to settle with the insurance plans.
“I do not know what is going on, but there are different signals coming from the Department of Justice CMS,” Mercatus Center Senior Research Fellow Brian Blase told Patient Daily.
The justice department argued in its motion that the plans do not have a right to the money because it was Congress’ desire that tax payers do not pay for the program, he explained.
“We do know that the Energy and Commerce Committee sent letters out to the insurance companies to get all of their communications with the administration,” Blase said.
Republicans on the committee, concerned the administration will use other funds to settle the claims, sent letters this week to six insurance companies and two insurance associations asking for those communications.
In the memo published Sept. 9, HHS stated that it wants to work with Congress “on the necessary funding for outstanding risk corridor payments.”
“HHS recognizes that the Affordable Care Act requires the secretary to make full payments to issuers,” according to the memo. “HHS will record risk corridors payments due as an obligation of the United States government for which full payment is required.”
The department also noted the justice department is “vigorously defending” the claims in court, but that “we are open to discussing resolution of those claims.”
In its filing Friday -- for a $338 million lawsuit brought by Blue Cross and Blue Shield of North Carolina and Oregon-headquartered Moda Health Plans -- the DOJ argued that Congress had “directly spoken” against the use of federal money to pay for the risk corridor program.
Its argument is that there is no deadline for repayment under the program.
CMS, which manages the program, has claimed it will pay the $2.5 billion 2014 shortfall from money collected in 2015 and 2016. It has not released details on how much was collected, or is owed, from 2015.
Apart from the Blue Cross and Moda lawsuits, Highmark has filed a suit demanding $223 million; the shuttered Land of Lincoln consumer-operated and orientated plan (co-op) wants $73.9 million; Health Republic Insurance, also a co-op and due to close down, is asking $22 million; and Maine Community Health requests $1 million.
Under the original ACA, the risk corridor was not designed to pay for itself entirely, but the Republican-led Congress later voted to make it revenue-neutral.
Organizations in this story
U.S. Department of Health and Human Services (HHS) 200 Independence Avenue Southwest Washington, DC - 20201