Feds ask court to toss out two insurers' risk corridor lawsuits

hhs

The Obama administration has filed motions to dismiss two cases in which health insurers are seeking millions of dollars from the risk corridor program, arguing their claims are both premature and invalid.

In the cases--filed by Moda Health and Blue Cross Blue Shield of North Carolina--the insurers are seeking $191 million and $147 million, respectively, in risk corridor payments from the federal government. Other insurers, including Highmark and some consumer operated and oriented plans, have also sued over risk corridor payment shortfalls.

The Obama administration recently indicated it might consider settling the insurers’ cases, but Republican lawmakers urged it not to do so, saying they are worried that federal funds were being illegally deployed to help insurers recover losses on marketplace products.

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The risk corridor program—which transfers funds from insurers that were more successful on the Affordable Care Act exchanges to those that were less successful—paid out just 12.6 percent of what it promised insurers for the 2014 benefit year, a shortfall that hit CO-OPs especially hard.

The Department of Health and Human Services, though, said in a motion to dismiss the Moda case and in another motion to dismiss the BCBSNC case that the insurers’ cases are without merit.

Under the three-year, budget-neutral payment framework of the risk corridor program, the motions argue, HHS does not owe any insurer final payment before the end of the program. Similarly, because the risk corridor program hasn’t yet concluded, “the final payment amounts are unknown and cannot be determined at this time,” according to the motions.

Finally, HHS argues that it has no obligation to pay insurers beyond what it takes in collections. Congress “removed any ambiguity” about that when it prohibited HHS from paying risk corridors amounts from appropriated funds other than collections, the motion in the Moda case states. “Thus, issuers could not have had a reasonable expectation to annual payments in excess of collections,” HHS adds in the BCBSNC case filing.

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