The U.S. Court of Federal Claims has ordered CMS to pay Montana Health Co-op $1.2 million in cost-sharing reduction payments for the fourth-quarter of 2017.
The order follows a ruling last month when U.S. Court of Federal Appeals Judge Elaine Kaplan sided with the payer. She said in her decision the government was statutorily obligated to provide the CSRs and the obligation "was not vitiated by Congress's failure to appropriate funds for that purpose."
The order could have implications for other ongoing legal battles, including CSR claims from payers in South Dakota and Maine. DOJ could also still appeal the Montana ruling.
Karen Early, director of operations for the Helena-based co-op, told Healthcare Dive last month the CSR money helped keep down members' costs.
"These are funds that do not benefit the health insurance company," she said. "The cost-sharing reduction funds are just benefit money that is passed through the health insurance company to offset the costs of benefits for folks with lower incomes."
Montana Co-Op, which has about 50,000 members in Montana and Idaho, sued the federal government in January after President Donald Trump stopped CSR payments to insurance companies in the Affordable Care Act exchanges last year.
HHS said the Obama administration overstepped "the legal boundaries" in the Constitution to make the CSR payments starting in 2014. Congress is the entity that must appropriate the money — not the executive branch, it argued.
"It has been clear for many years that Obamacare is bad policy. It is also bad law," HHS said in a October 2017 statement announcing the end of the payments. "The Obama administration unfortunately went ahead and made CSR payments to insurance companies after requesting — but never ultimately receiving — an appropriation from Congress as required by law."
Congress discussed taking over the CSR payments last fall, but legislation stalled on Capitol Hill.
In her decision in September, Kaplan said the ACA required the federal government to make CSR payments. She highlighted one critical sentence in the law to back up her point: "An issuer of a qualified health plan making reductions under this subsection shall notify the Secretary of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions."
Court decisions on risk payments have gone in both directions. A panel of judges on the U.S. Court of Appeals for the Federal Circuit voted in favor of the federal government on a $12 billion risk corridor payment case in June. However, Molina Healthcare won a $52 million risk corridor case last year.
CSR payments helped keep down out-of-pocket costs for lower middle-class members in the exchanges. When Trump stopped the payments, critics charged premiums would skyrocket further and cause instability in the ACA exchanges. The move did help push some national payers from the ACA marketplace, but skyrocketing premiums aren't expected in 2019.
"Ironically, ending CSR payments has helped the market weather some of the administration's other harmful actions," according to a recent Center on Budget and Policy Priorities report that suggested bringing back CSR payments would actually cause more problems.
With Congress not taking up the CSR payment issue, lawsuits involving the payments will likely continue in the coming months as payers look to get money they feel is owed them and guaranteed in the ACA.