- On Wednesday, Health Republic Insurance filed a suit in the U.S. Court of Federal Claims against the United States of America.
- Last October, CMS announced it would only pay insurers 12.6 cents on the dollar that is owed to insurers through the “risk corridor” program. The decision manifested in a $20M financial hit for Health Republic Insurance, who announced that month it would not offer coverage in 2016.
- The Oregan-based insurer is hoping to make the suit a class action so that other insurers might recover withheld ACA funds.
Health Republic claims payments to have been distributed by the federal government via the "risk corridor" program, were "express and binding" obligations. About 15,000 individuals had to find new coverage options after Health Republic ceased to offer plans this year.
The risk-sharing program was developed to mitigate risk of insurers that might end up with sicker patients than anticipated, and it had been an essential part of the ACA's capacity to encourage participation from companies in health insurance exchanges. Payments, however, came up far short for insurers and the federal government had made the program budget-neutral, thereby eliminating other funding sources.
Health Republic isn't the only Oregon insurer to be in fiscal dire straits. Moda Health, for instance, was hit much worse than Health Republic, receiving only $11 million of $181 million owed it in the first two years of the program. In addition, Moda was part of a temporary state takeover. Earlier this month, Moda agreed to stay in business and generate $179 million by taking the steps the insurance regulators outlined in a consent order.
Health Republic CEO Dawn Bonder stated the funds they are seeking will allow the carrier to repay the $60 million it owes the federal government instead of defaulting on the federal loans.