Payers shortchanged $1.1B in ACA risk adjustment payments as Bright, Friday fail to meet obligations: CMS

Bright Health Group and Friday Health Plans are both unable to pay their dues into the 2022 Affordable Care Act (ACA) risk adjustment pool, costing their peers more than $1 billion, according to a notice from the Biden administration.

The Centers for Medicare & Medicaid Services (CMS) said Friday in a notice (PDF) that Bright made a "significant payment" toward its 2022 risk adjustment total of $1.5 billion in September 2023, but its plans in Florida, Illinois, Texas and Colorado were not able to cover their share, a shortfall of nearly $380 million from the $1.9 billion owed in total.

Most of that is in Florida, where Bright is short by $199.3 million, according to the notice.

Bright Health has exited the ACA exchanges and did not participate in the program for 2023, CMS said. The agency said it worked with the company as well as insurance regulators in the states where payments are outstanding to build a repayment plan for the outstanding funds.

Details on some of these repayment plans were published on LinkedIn by Ari Gottlieb, a principal at A2 Strategy Group who closely monitors the insurtech space.

In the post Oct. 26, Gottlieb said he has spent a significant amount of time pushing the feds for more details on the repayment deal and its terms. In a follow-up post, he said the notice does shed light on the deal itself but doesn't really make clear why CMS was willing to make it.

"I sincerely appreciate CMS’ response and attempt to publicly add to disclosure," he wrote. "But I honestly still don’t understand why they made this deal, which disadvantages everyone aside from CMS and Bright."

Friday Health Plans, meanwhile, went under earlier this year and, as such, has been unable to make the vast majority of payments owned into the risk adjustment program. In the notice, CMS said Friday has submitted just 5% of the $780 million in costs.

CMS said it will "pursue all federal debt collection methods available" to secure the outstanding sum.

Friday also continued to offer plans in certain markets and will owe funds into the 2023 risk adjustment pool, CMS said.

Gottlieb wrote that the sheer scale of the missing payments should spur conversations about changes to the program.

"The magnitude of this issue is massive—$1.1 billion expected and owed to other companies was not paid," he said. "This highlights the need for significant changes to how the risk adjustment functions."