Montana co-op wins $5.3M CSR lawsuit
Montana Health Co-op won a court case this week challenging the Trump administration's decision last year to stop cost-sharing reduction (CSR) payments to insurers.
The cooperative, which has about 50,000 members in Montana and Idaho, sued the federal government in January for $5.3 million.
U.S. Court of Federal Appeals Judge Elaine Kaplan ruled that the government didn't fulfill its obligation under the Affordable Care Act when it halted the payouts in October 2017.
Karen Early, director of operations for the Helena-based co-op, told Healthcare Dive on Thursday the payer is pleased with the decision. She added that the CSR money helped keep down members' costs.
"These are funds that do not benefit the health insurance company. 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," Early said.
President Donald Trump said last year that CSR payments should be the responsibility of Congress, which never provided money for the payments as part of the ACA. Instead, CMS paid the insurance companies between 2014 and the president's decision to halt them.
The ACA called for the government to pay health insurers in the ACA exchanges to offset out-of-pocket costs for people with incomes up to 250% of the federal poverty level. Despite the end of CSR payments, insurance companies were still required by the ACA to contain out-of-pocket costs for those members.
In her decision, Kaplan pointed specifically to one sentence in the ACA: "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."
Montana Health Co-op is one of multiple payers to sue over the CSRs or risk corridor payments that were meant to help payers cover people in the ACA exchanges. Court decisions have gone in both directions.
A panel of judges on the U.S. Court of Appeals for the Federal Circuit decided in favor of the government on a $12 billion risk corridor payment case in June. On the other hand, Molina Healthcare won a $52 million risk corridor case last year.
When Trump ended the payments, critics said his action would destabilize the exchanges, resulting in higher premiums, but that hasn't panned out. In fact, proposed premiums for 2019 are lower than what payers requested in 2018.
That's mostly because payers have found a way to stabilize the market without CSR payments, including with the practice of silver loading. A recent Center on Budget and Policy Priorities report suggested that bringing back the payments without other reforms could actually cause more problems in the ACA marketplace. "Ironically, ending CSR payments has helped the market weather some of the administration's other harmful actions," according to the report.