Illinois co-op to feds: We'll pay if you pay

Dive Brief:

  • Illinois insurance regulators are attempting to work out a deal with the federal government that would keep the state's co-op afloat in the face of its $32 million bill from CMS for the ACA's risk-adjustment program.
  • Land of Lincoln Health will pay up if the federal government reduces the bill to account for what it owes the insurer under the risk corridors program -- which according to its recent lawsuit amounts to $73 million.
  • Illinois Insurance Department acting Director Anne Melissa Dowling is basing her stance on CMS' own interim final rule from May that says state governments can brainstorm solutions for helping struggling insurers while the agency continues to work on improvements to the risk-adjustment payment methodology that has slammed small insurers, The Hill reported.

Dive Insight:

Land of Lincoln could potentially be saved by such a deal to offset its risk adjustment charge against the subsidies it is scheduled to receive from the federal government, essentially treating the two transactions as one so the insurer doesn't have to take such a hard hit to its capital cushion and potentially shut down as a result.

However, the deal hinges on whether the government accepts it, on what terms, and whether Land of Lincoln would in fact be left in strong enough financial standing to avoid closure. Negotiations between Illinois and federal officials are ongoing, reported SNL Financial, with the state being cautiously confident CMS will accept the proposal.

If the government does not support the deal, however, Land of Lincoln is in no position to "win a pissing match" with the feds by withholding payment, suggested Balloon Juice, because the government could simply stop payment of advanced premium tax credits and cost sharing reduction subsidies, which would force the insurer to burn through its ready cash.

The Illinois Insurance Department is scheduled to meet with Land of Lincoln officials today to discuss the insurer's future.

Filed Under: Payer
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