Dive Brief:
- Insurers will get a chance to pursue their claim for $12 billion in losses owed under the Affordable Care Act's risk corridors program after the U.S. Supreme Court on Monday agreed to take up a case.
- At issue is whether Congress had the power to cancel the government's promise to make the payments through means of appropriations riders rather than through amending the statute. The risk corridor payments — blasted as bailouts by Republicans opposed to the ACA —were meant to limit the financial losses to health plans that covered a larger proportion of an older, sicker population.
- Business groups, including the U.S. Chamber of Commerce, had urged the Supreme Court to take the case, with the Chamber warning if the government is allowed to renege on its promised payments, it could scare off the business community from working with the government in the future.
Dive Insight:
Insurers want their money — $12.3 billion dollars to be exact — and the case heading to the Supreme Court may help them recover the funds. The high court will hear the case during its next term, which begins in October and ends in the summer of 2020.
Insurer Land of Lincoln Health sued the government in 2016 seeking more than $75 million it claims the government owed it under the ACA's risk corridors program. The insurer claimed it set its premiums lower than it would have without the promise of the funding. Similar payer suits from Moda Health Plan, Blue Cross and Blue Shield of North Carolina and Maine Community Health Options, were later consolidated with that suit.
A federal appeals court ruled the government wasn't obliged to pay the full amount of the risk corridor payments, finding the ACA public exchange issuer agreements weren't binding on the government but merely proposed how the program should work. The insurers then sought Supreme Court review, asking the high court to overturn the federal appeals court's ruling.
America's Health Insurance Plans and the Association for Community Affiliated Plans applauded the high court's agreement to review the case.
"The Supreme Court's decision to hear this case recognizes how important it is for American businesses, including health insurance providers, to be able to rely on the federal government as a fair and reliable partner," AHIP CEO Matt Eyles said in a statement. "Strong, stable and predictable partnerships between the private and the public sector are an essential part of our nation's economy, and our industry looks forward to having this matter heard before the Court."
AHIP noted millions of Americans rely on the individual and small group markets for care, and ACAP, whose members are owed millions of dollars in payments, said ACAP-member plans entered the ACA marketplace with the clear understanding that they would receive risk corridor payments.
"We're pleased that the Supreme Court has agreed to hear the case, as it gets to the heart of the concept of the full faith and credit of the United States government," Margaret Murray, CEO of ACAP, said in a statement. "We asked the appeals court in an amicus brief to affirm that the Federal government should be as good as its word in statute, and urge the Supreme Court to do the same."
"It's absurd to ask health plans — or anyone else doing business with the United States government — to price in the notion that Congress would renege on a whim," Murray said.
The risk corridor program was intended to motivate payers to take on sicker patients in the individual insurance market by redirecting funds from payers with lower than expected costs to those with higher than expected costs.
But HHS subsequently issued guidance saying the risk corridors program would be applied in a budget neutral fashion, which meant a lower payout to insurers.
Subsequently, Republicans in Congress passed appropriation riders barring HHS from paying more in risk corridor payments than it collected and also restricted HHS from using other program monies to fund risk corridor payments.
When Congress declined to fund the program, several health insurance co-ops closed, citing the lack of risk-sharing.
Katie Keith, a health law policy expert and faculty member at Georgetown University, told Healthcare Dive a favorable ruling for insurers could spark questions on how the payout occurs.
"If anything, the Supreme Court taking this case suggests insurers could be made whole," Keith said. "If and when that does happen, there are going to be a lot of operational questions. A lot of companies have gone bankrupt or bought by venture capital firms."