Highmark sues feds over risk corridor payments

Highmark has filed a lawsuit against the federal government claiming that it did not hold up its end of the bargain on risk corridor payments promised during the first year of Affordable Care Act exchanges, according to an announcement from the insurer.

Highmark is seeking $223 million in risk corridor payments from 2014, plus interest and legal fees. So far, the Pittsburgh-based insurer says it has received just $27.3 million of those payments.

"Highmark entered the ACA markets in good faith--as encouraged by the federal government--with the assurance that the government would fulfill its legal commitments," Highmark Health President and Chief Executive Officer David Holmberg said. "Given the federal government's failure to honor its obligations, even after repeated assurances that it would do so, we have no choice but to file litigation. We have a fiduciary responsibility to our 5.2 million health plan members to seek payment."

The risk corridor program was created as part of the Affordable Care Act as a way to compensate insurers that took in new high-risk beneficiaries that entered the marketplace. However, the program paid out just a portion of what it owed insurers, leading the Centers for Medicare & Medicaid Services to explore other sources of funding.  

The Highmark lawsuit is the second one to target the ACA's risk corridor program. In February, Health Republic Insurance of Oregon sued the government for $5 billion for failing to make timely payments. Ana Gupte, an analyst with Leerink Partners LLC, told the Wall Street Journal that Highmark's suit may prompt other insurers to follow the company's lead, particularly if they face pressure from shareholders.

For more
- here's the Highmark announcement
- read the WSJ article

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