HHS promised full risk corridors payments, insurers say

The U.S. Department of Health and Human Services repeatedly told health insurers that it was legally required to make full Affordable Care Act risk corridors program payments, a group of nonprofit health insurers says.

The group, the Alliance of Community Health Plans, makes that argument in a legal brief about the ACA risk corridors program payment failure. The group filed the brief with the U.S. Court of Appeals for the Federal Circuit.

Related: 20 biggest new ACA risk corridors failure absorbers

In March 2014, when Kathleen Sebelius was the HHS secretary, HHS told insurers in a notice that, “The Risk Corridors program is not statutorily required to be budget neutral,” and “Regardless of the balance of payments and receipts, HHS will remit payments as required under section 1342 of the Affordable Care Act,” the ACHP says in the brief.

Later, in February 2015, when Sylvia Mathews Burwell was the HHS secretary, HHS told insurers in the introduction to an ACA regulation that, “HHS recognizes that the Affordable Care Act requires the secretary to make full payments to issuers,” the ACHP says.

The ACHP represents AvMed, Geisinger Health Plan, Kaiser Foundation Health Plan and other nonprofit health plans. The group filed the brief because it wants the appeals court to overturn a lower-court ruling on an ACA risk corridors payment collection suit, Land of Lincoln Mutual Health Insurance Company v. the United States of America.

Land of Lincoln Mutual, a Chicago-based health insurer that failed, sued the federal government in an effort to collect risk corridors program payments for 2014 and 2015.

The ACHP says the ACA risk corridors program payment failure has had a severe effect on its own member insurers’ ability to offer affordable health coverage.

The ACHP says the program payment failure:

• • • • Increased one small member’s premiums by 20 percent.

      • Forced another member to pull out of the ACA exchange system.

      • Led to “severe harm” at an insurer with operations in several states.

The risk corridors program was supposed to tempt insurers to enter a new and uncertain market, by protecting themselves against unexpected losses. Then, when the insurers did suffer unexpected losses, the government refused to make program payments, the ACHP says.

“This led to serious problems with cash flow, risk-based capital, and state-regulated reserve requirements,” the ACHP says.

President Donald Trump’s administration has not yet weighed in on the ACA risk corridors program lawsuits. (Photo: White House)