Category Archives: ACA Risk Corridor Payments

U.S. Supreme Court sides with insurers in battle over risk corridor payments

Posted on by • Posted in ACA, ACA Risk Corridor Payments, Health Insurance Industry, Health Policy, Supreme Court • Leave a comment

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Supreme Court seems to side with insurers in ACA risk corridor ...

The Supreme Court sided with insurers in a years-long battle over billions in payments promised under the Affordable Care Act.

The nation’s highest court ruled (PDF) 8-1 on Monday that the ACA’s risk corridor program created an obligation for the federal government to pay health plans promised funds.

The insurers suing for damages sought $12 billion in unpaid funds from the program.

The ACA established the risk corridors to encourage health plans to participate in the exchanges. If an insurer earned massive profits through the individual market, the government would claim some of those funds and pay it out to insurers that are performing poorly.

The government did collect those funds, but did not pay out money to struggling insurers. The risk corridor program closed in 2016 after three years.

The justices argued that the government was compelled to make the payments.

“The plain terms of the risk corridors provision created an obligation neither contingent on nor limited by the availability of appropriations or other funds,” the court argued.

Justice Samuel Alito was the lone dissent in the case.

The justices also disputed the government’s argument that Congress implied a repeal of the risk corridors through appropriations riders. The justices said that any riders did not actually change the payment methodology or suggest the payments were not required.

The court also argued that the health plans had standing to sue under the Tucker Act.

“Petitioners clear each hurdle: The risk corridors statute is fairly interpreted as mandating compensation for damages, and neither exception to the Tucker Act applies,” the court said.

In his dissent, Alito blasts the opinion as a bailout for health plans.

America’s Health Insurance Plans CEO Matt Eyles praised the ruling in a statement.

“The federal government made a clear commitment in the interest of building stable markets and making coverage more affordable for individuals and small employers,” Eyles said. “Health insurance providers kept their commitments while incurring substantial losses.”

“Today’s decision, as the Supreme Court observes, reflects ‘a principle as old as the Nation itself: The Government should honor its obligations,’” he added. “We appreciate that today’s Supreme Court 8-1 decision ensures that the federal government honors the obligations it made for services the private sector already delivered.”

 

SUPREME COURT TAKES UP $12B DISPUTE OVER ACA RISK CORRIDOR PAYMENTS

Posted on by • Posted in ACA, ACA Risk Corridor Payments, Center for Medicare and Medicaid Services (CMS), Dept of Health and Human Services (HHS), Government Accountability Office, Health Insurance Industry, Health Policy, Health System, Hospital, Individual Health Insurance, Supreme Court • Leave a comment

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U.S. Supreme Court

The justices agreed to hear arguments over whether Congress can pass riders that withhold funds in contravention of the relevant law’s intent without actually repealing the relevant law.

KEY TAKEAWAYS

The health plans argue the ACA’s mandate to issue risk corridor payments could not be repealed through an appropriations rider.

The approximately $12 billion in payments at issue in this dispute are for three benefit years: 2014-2016.

The U.S. Supreme Court agreed Monday to take up three consolidated cases from health plans challenging Congress’ refusal to authorize $12 billion in risk-mitigation payments under the Affordable Care Act.

The cases—which were brought by Maine Community Health Options, Moda Health Plan Inc., and Land of Lincoln Mutual Health Insurance Co.—argue that the ACA’s risk corridor program obligated Health and Human Services to make payments that the law intended “to induce insurer participation in the health insurance exchanges by mitigating some of the uncertainty associated with insuring formerly uninsured customers.”

Following the 2014 midterm election, lawmakers on Capitol Hill enacted an appropriations law for fiscal year 2015 that “would potentially allot money to HHS to cover” any such payments for the 2014 benefit year, but the law included a rider that required HHS to maintain the budget neutrality of the risk corridor program, the health plans said in their petition.

Because the amounts collected under the risk corridor program for 2014 “came nowhere close to what the government owed to insurers,” the government paid out only 12.6% of the total owed for the year, prorating the funds it owed to each insurer, the health plans wrote.

Similar riders were included in appropriations bills for fiscal years 2016 and 2017. But HHS used the funds it collected from benefit years 2015 and 2016 to further pay what it owed from the 2014 benefit year, making no payments for the 2015 and 2016 benefit years, the health plans wrote. (The program ended after three years.)

The health plans proposed two questions in the petition for a writ of certiorari for the justices to consider, but the justices agreed to hear argument only on the first: “Given the ‘cardinal rule’ disfavoring implied repeals—which applies with ‘especial force’ to appropriations acts and requires that repeal not be found unless the later enactment is ‘irreconcilable’ with the former—can an appropriations rider whose text bars the agency’s use of certain funds to pay a statutory obligation, but does not repeal or amend the statutory obligation, and is thus not inconsistent with it, nonetheless be held to impliedly repeal the obligation by elevating the perceived ‘intent’ of the rider (drawn from unilluminating legislative history) above its text, and the text of the underlying statute?”

In its response to the health plans’ petition, the U.S. government argued that a Government Accountability Office report identified only two possible sources of funding for the risk corridor payments: (1) the funds collected by HHS under the program itself, and (2) any lump-sum appropriation to manage certain Centers for Medicare & Medicaid Services programs. By enacting the appropriations laws as it did, Congress said that only the first funding source would be allowed, the response states.

America’s Health Insurance Plans (AHIP) President and CEO Matt Eyles said in a statement that insurers need stability from the government.

“Millions of Americans rely on the individual and small group markets for their coverage and care. Health insurance providers are committed to serving these patients and consumers, working with the federal government to deliver affordable coverage and access to quality care,” Eyles said. “The Supreme Court’s decision to hear this case recognizes how important it is for American businesses, including health insurance providers, to be able to rely on the federal government as a fair and reliable partner. Strong, stable and predictable partnerships between the private and the public sector are an essential part of our nation’s economy, and our industry looks forward to having this matter heard before the Court.”

The justices allotted one hour for oral argument on the dispute.