Mandy Cohen testified that just four CO-OPs are open and free from corrective action plans.

Health Republic Insurance Company of Oregon is suing the United States of America to try to get the country to pay it and other carriers about $5 billion of the risk corridors program cash benefits offered by the Patient Protection and Affordable Care of 2010 (PPACA).

See also: What’s inside that PPACA risk corridors program box?

Health Republic, one of the 24 nonprofit, member-owned plans created by the PPACA Consumer Operated and Oriented Plan (CO-OP) program, says in a complaint filed with the U.S. Court of Federal Claims that it and other health coverage providers made business decisions based in part on PPACA Section 1342.

PPACA Section 1342, which created the risk corridors program, calls for the secretary of the U.S. Department of Health and Human Services (HHS) to use cash from exchange qualified health plan (QHP) issuers that do well in 2014, 2015 and 2016 to help QHP issuers that do poorly in those years.

“Section 1342 is a money-mandating statute that requires payment from the federal government to QHPs,” Health Republic says in the complaint.

The PPACA risk corridors program formula calls for the risk corridors program to pay the CO-OPs about $2.9 billion for 2014, and even more for 2015, Health Republic says.

Because revenue from thriving QHP issuers fell short of expectations, and Congress has blocked HHS efforts to use other sources of money to make risk corridors payments, HHS paid the CO-OPs less than $400 million for 2014, and it looks as if the program payment gap for 2015 will be even bigger, Health Republic says.

Health Republic is seeking class action status for the case. The company, which says it is owed $7.1 million in risk corridors money for 2014 and $15 million for 2015, hopes to represent a class that includes all QHP issuers that are owed risk corridors program money.

The government has an explicit obligation under PPACA Section 1342 and related regulations to make the risk corridors program payments, the company says.

Meanwhile, today the House Oversight health care subcommittee held a sparsely attended hearing on the CO-OPs.

Dr. Mandy Cohen, the Centers for Medicare & Medicaid Services (CMS) official who oversees the program, said just four of the 24 carriers started with CO-OP loans are still open and free from any corrective action plans. 

Another seven are operating but subject to corrective action plans, she said.

She declined to give more details about the CO-OPs, but House lawmakers said they had received a large collection of CO-OP documents from CMS Wednesday, after going for three months without getting any response from CMS to requests for CO-OP information.

Al Redmer Jr., a Republican who serves as the Maryland insurance commissioner, said Maryland’s CO-OP has been doing well. He said policymakers could help the CO-OPs and other relatively small, new insurers by changing another PPACA risk management program, the risk-adjustment program, which is supposed to use cash from carriers with low-risk enrollees to help carriers with high-risk enrollees.

The risk-adjustment program contribution formula hurts smaller, rapidly growing QHP issuers, and policymakers could greatly improve the program by exempting new carriers from having to pay into the program for several years, Redmer said.

Policymakers could also improve the program by capping any risk-adjustment payments a carrier has to make to 2 percent of its revenue, Redmer said. 

See also: 

CO-OP exec: ‘The long knives came out’ [With video]

Gloom, hope shape early 2016 health rate filings

      

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