U.S. Supreme Court in Washington. (Photo: J. Scott Applewhite/AP) U.S. Supreme Court (Photo: J. Scott Applewhite/AP)

Health insurers are now pleading with the U.S. Supreme Court to get it to make the rest of the federal government to pay $12.4 billion in Affordable Care Act (ACA) risk corridors program bills.

The insurers — Maine Community Health Options, Land of Lincoln Mutual Health Insurance Company, and Moda Health Plan Inc. — have filed petitions in connection with their suits against the United States of America.

Moda Health says in its brief that the question presented is, “Whether Congress can evade its unambiguous statutory promise to pay health insurers for losses already incurred simply by enacting appropriations riders restricting the sources of funds available to satisfy the government’s obligation.”

(Related: Supreme Court to Hear Insurers’ Plea for $12B in ACA Program Payments)

“That bait-and-switch is legally indefensible and enormously consequential,” the company says. “The government’s view that it may promise boldly, renege obscurely, and avoid both financial and political accountability for retroactively depriving private parties of billions of dollars in reliance interests is truly remarkable.”

Maine Community Health Options says letting the United States avoid paying the risks corridors program bills would violate federal government payment principles.

“Legislative inaction, and legislative history not reflected in statutory text, cannot retroactively repeal a statutory obligation of the United States,” the company says. ”In this case, the unambiguous language of the relevant statutes should have compelled judgment for insurers. Insurers relied on the unequivocal statutory direction in Section 1342 of the Affordable Care Act that the government ‘shall pay’ insurers the full amount due under the statutory formula.”

Land of Lincoln says the dispute is also about an agreement the United States made with the ACA exchange plan issuers.

“Even if the appropriations riders could be interpreted as extinguishing the government’s payment obligation retroactively, they would represent a breach of contract for which the government is liable,” the company says.

The ACA Risk Corridors Program

From 2008 through 2010, Democrats were in control of both the House and the Senate.

They developed the ACA public exchange program, in an effort to give consumers an easy way to shop for subsidized, standardized health coverage. They based many of the ACA exchange program rules and features on the rules and features for the popular Medicare Part D prescription drug plan program.

The Medicare Part D drug plan program has used a “risk corridors” program to make insurers comfortable with participating in the program.

Issuers with exceptionally high operating profits are supposed to send some of the extra cash to program managers.

Program managers are supposed to use that cash, and cash from the federal government, to help issuers with claims costs that exceed 105% of their Medicare drug plan premium revenue.

The ACA exchange program was also expected to use a combination of cash from thriving issuers and cash from the federal government to help the struggling issuers compensate for poor performance in 2014, 2015 and 2016.

The U.S. Department of Health and Human Services, the parent department of the Centers for Medicare and Medicaid Services (CMS), said in a final rule published in March 2013 that, “The risk corridors program is not statutorily required to be budget neutral,” according to the Maine Community Health Options brief. “Regardless of the balance of payments and receipts, HHS will remit payments as required.”

In 2014, after Republican critics of the ACA took control of the House, they changed the way the ACA risk corridors program worked: They succeeded in securing passage of a budget neutrality provision that blocked CMS from using any source of revenue other than payments from thriving ACA exchange plan issuers to help the struggling issuers. Republican critics of the ACA also succeeded at putting similar provisions in HHS appropriations acts for 2015 and 2016.

Republican critics of the ACA, including Sen. Marco Rubio, R-Fla., argued that the ACA risk corridors program was a bailout for health insurers. Lobbyists “put a bailout fund in the law that would allow public money to be used, taxpayer money, to bail out companies when they lost money,” Rubio said in a presidential primary debate in February 2016, according to a debate transcript posted by Grabien. “We led the effort and wiped out that bailout fund.”

Because the ACA exchange system had severe technical and operational problems early on, CMS collected only a modest amount of cash from thriving exchange plan issuers.

CMS program managers have paid the struggling issuers only about $482 million of the $12.8 billion in payments the issuers were expecting to receive, according to the Moda Health brief.

The struggling issuers affected by the ACA risk corridors program managers’ failure to make the promised payments began to file lawsuits against the United States of America in the U.S. Court of Federal Claims in 2016.

Some panels at the U.S. Court of Appeals for the Federal Circuit sided with the insurers, and some sided with the USA.

The Supreme Court agreed in June to hear the insurers’ appeals this year. The court has said it will allocate one hour for oral arguments.

Resources

Links to the new Maine Community Health Options v. United States briefs are available here.

— Read Two Judges Blast USA in Risk Corridors Appeal Dissentson ThinkAdvisor.

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