The federal government says it has given itself at least three years to make Affordable Care Act risk corridors program payments, and that insurers cannot sue it over missed payments for 2014 or 2015 because the payments are not yet due.
Lawyers for the federal government have included that argument in a motion to dismiss the suit Health Republic Insurance Company, plaintiff, v. USA (Case Number 16-259C).
Health Republic, a failed nonprofit and member-owned Consumer Oriented and Operated Plan carrier that was based in Portland, Oregon, filed the suit in the U.S. Court of Federal Claims in February, in an effort to get the federal government to make $5 billion in risk corridors program payments owed for 2014 and 2015.
Drafters of the ACA created the program, which was supposed to use cash from ACA exchange plan issuers that did well in 2014, 2015 and 2016 to help those that did poorly, in an effort to encourage insurers to participate in the exchange system and hold premiums down.
Kevin Counihan, the head of the exchange program, an arm of the U.S. Department of Health and Human Services, said in a memo sent to state insurance regulators in July 2015 that the risk corridors program would make payments for 2014, and that state regulators should take the payments into account when reviewing insurers’ rate filings for 2016.
In October, HHS told insurers and regulators that the program had collected enough cash from thriving issuers to pay only about 13 percent of what the program owed to the struggling issuers.
Health Republic is asking for court approval to represent a class consisting of all health insurers that are owed ACA risk corridors program payments.
Health Republic says the government made it lower its 2015 rates. (Image: Health Republic)
What the parties are saying about payment timing
In the motion to dismiss, the federal government says the claims court has no jurisdiction over the case, because the federal government has “sovereign immunity,” or protection against most kinds of lawsuits, and can usually be sued only when it lets itself be sued. A federal law, the Tucker Act, does let companies sue over contract payments, but only for “acutal, presently due money damages from the United States.”
The ACA does not say when HHS has to make risk corridors program payments, and HHS has established a three-year payment framework, the government says.
“Under this framework, HHS cannot owe Health Republic, or any other issuer, final payment before the end of the program cycle in 2017,” the government says. “As such, Health Republic has no substantive right to ‘presently due’ payment that permits the court to exercise jurisdiction over its claims.”
Health Republic says in its response that the ACA risk corridors program is based on the Medicare Part D prescription drug program risk corridors program, which does require annual payments; that making regular and predictable payments is critical to the operation of a health insurance market stabilization program; and that the plain language of the ACA calls for HHS to set up an annual risk corridors program.
The federal government has not identified any language in any statute that supports a three-year ACA risk corridors program framework, Health Republic says.
Even if the federal government can use a three-year payment framework, deciding whether it can do so is something for the court to decide at a later point, not something for the court to turn aside now with a motion to dismiss, Health Republic says.
In a footnote, Health Republic says the federal government tried to use the threat of a withdrawal of federal CO-OP loans to force Health Republic to lower its proposed 2015 premiums to the levels competitors were charging. Health Republic told the government it thought other Oregon carriers’ premiums were unsustainable, but the government said the risk corridors program and other ACA risk management programs would protect carriers from any losses they might suffer as a result of charging low rates, Health Republic says.
“That was only true if the government paid on an annual basis,” Health Republic says.
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