HHS scrubs $11.5B in risk corridor funding from budget; DOJ attorney chalks it up to an accounting error

HHS removed $11.5 billion in risk corridor funding, insisting there is no obligation to make payment to insurers. (Sarah Stierch/CC BY 4.0)

The Department of Health and Human Services has removed billions of dollars in risk corridor funding from its budget proposal after that line item became entangled in a legal battle between health insurers and the government.

In court filings last week, attorneys with Land of Lincoln Mutual Health Insurance Company and Moda Health Plan highlighted portions of the HHS budget proposal that included $11.5 billion for risk-corridor payments in fiscal year 2018, contradicting the Department of Justice’s stance that the risk corridor program was intended to be budget neutral. 

But HHS has since scrubbed the budget of the $11.5 billion appropriation, substituting $25 million for risk corridor collections instead. It also removed language indicating it would fully fund the program.

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Both Land of Lincoln and Moda are among several insurers that have filed lawsuits to force HHS to release unpaid risk-corridor payments. The $11.5 billion appropriated in the original HHS document, combined with a proposal to “fully fund the risk corridor program,” would have wiped out the government’s $12.3 billion tab.

“The ‘revised’ agency budget appears to have been hastily rewritten simply to reflect the government’s litigation position in this case,” Moda’s attorney Steven J. Rosenbaum wrote in a court filing on Wednesday.

He noted that the revised budget is “entirely inconsistent” with President Donald Trump’s budget blueprint (PDF), which still includes $812 million in mandatory funding for the risk-corridor program.

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An attorney with the DOJ said the initial $11.5 billion appropriation included in the HHS budget was due to an “accounting treatment” leftover from the initial years of the program.

“The program periods for collecting funds have concluded and HHS has made accounting adjustments to reflect that termination,” DOJ attorney Alisa B. Klein wrote.

HHS maintained its position that the agency has no obligation to fund the risk-corridor program.

“There has been no change in the administration’s position regarding the litigation related to risk corridor payments under the ACA,” an HHS spokesperson said in an emailed statement. “Now that the program periods for collecting funds have concluded, HHS has updated its accounting of the risk corridor program to reflect the fact that there is no obligation to make payments beyond the amounts collected from insurers under the program.”