Kevin Counihan, the head of ACA programs that affect the commercial health insurance market, told regulators the risk corridors would make good on its obligations just three months before announcing the program could pay only 13 cents on the dollar. (Image: House hearing screen capture)

Officials at the Center for Consumer Information and Insurance Oversight have confirmed what most health insurers had expected: CCIIO will have to use risk corridors program cash it collects from health insurers for 2015 to pay 2014 claims. 

“No funds will be available at this time for 2015 benefit year risk corridors payments,” CCIIO officials say in a memo posted on its section of the website of the Centers for Medicare & Medicaid Services.

The Affordable Care Act risk corridors program was supposed to give insurers the confidence to keep individual and small-group exchange plan premiums low in 2014, 2015 and 2016 by using cash from thriving issuers to help struggling issuers.

Kevin Counihan, the head of CCIIO, told insurance regulators in July 2015 that the ACA risk corridors program would have the cash to pay its obligation, and that regulators should keep the risk corridors program in mind when reviewing rate proposals for 2016 coverage.

About 10 weeks later, on Oct. 1, 2015, CCIIO told insurers that it had collected only enough risk corridors program cash from thriving issuers to pay about 13 percent of the 2014 obligations.

CCIIO is not yet saying how much extra risk corridors program cash it might be able to send insurers for the remaining $2.6 billion in 2014 ACA risk corridors program obligations.

CCIIO is part of the Centers for Medicare & Medicaid Services, the agency that oversees ACA programs for the U.S. Department of Health and Human Services.

CCIIO oversees HealthCare.gov, the state-based ACA exchange program, the ACA health insurance rate review program, and other ACA programs and regulations that affect the commercial health insurance market.

Obama administration officials said in early 2015 that they would run the risk corridors program using only cash from the participating insurers, and Republicans in Congress later put a provision requiring the program to run without use of taxpayer funding in a must-pass budget bill.

Several insurers have filed suits against the federal government over the risk corridors program funding shortfall, arguing that the government should pay the benefits it has promised to pay.

Related: Why Highmark’s $223 million ACA suit matters to agents

Lawyers for the government say that the ACA risk corridors program managers have set up a three-year funding and payment cycle for the program, and that benefits payments will not be due until the end of the cycle. 

CCIIO officials acknowledge in the new memo that insurers have sued it over risk corridors program payment delays.

“As in any lawsuit [against the government], the Department of Justice is vigorously defending those claims on behalf of the United States,” officials say. “However, as in all cases where there is litigation risk, we are open to discussing resolution of those claims. We are willing to begin such discussions at any time.”

Related:

Conservatives want Congress to curb PPACA aid for insurers

Regulators wrestle with PPACA risk corridors numbers

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