Blue Cross of Idaho latest to sue over risk corridor shortfall

Lawsuit document

Photo credit: Getty/Eccolo74

As federal health officials, Congress members and payers continue to spar over the risk corridor program, yet another health insurer has turned to litigation to settle its grievances.

Blue Cross of Idaho filed a lawsuit in federal court this week, arguing that the U.S. government owes it $79.3 million through the risk corridor program, an Affordable Care Act provision aimed at stabilizing premiums in the public exchanges.

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The government acknowledged it was obligated to pay Blue Cross of Idaho the full amount it was owed for 2014, the suit says, but instead “arbitrarily” paid it only 12.6 percent of that--stating that the payments are limited by available appropriations. But the insurer argues “no such limits appear anywhere in the ACA or its implementing regulations or in BCI’s contracts with the government.”

The risk corridor program has experienced considerable payment shortfalls because of a provision included in an omnibus spending bill that prohibits the Department of Health and Human Services from paying out more than it collects—which insurers correctly predicted would hamstring the program.

The Centers for Medicare & Medicaid Services wrote in a memo last month that it expects all 2015 risk corridor collections will be used toward remaining 2014 payments, and “no funds will be available at this time for 2015 benefit year risk corridors payments.”

That is a problem for Blue Cross of Idaho, the suit says, as it is owed more than $39 million in payments from 2015. Thus, it seeks a total of $79.3 million in damages, including alleged damages from 2014.

In the recent CMS memo, the agency indicates it might be willing to settle with insurers that have filed suit over the risk corridor shortfalls, a growing list that includes Highmark, Evergreen Health and Blue Cross Blue Shield of North Carolina. But GOP lawmakers cried foul, saying that a permanent fund set aside for judgments against the U.S. government shouldn’t be used to bail out insurers.

Despite its stated interest in settling with insurers, the government also filed to dismiss two such lawsuits. One legal expert, though, argues that insurers have a strong case to recoup risk corridor payments through their lawsuits.

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