Topics
More on Policy and Legislation

Supreme Court will hear insurers' argument for billions in risk corridors funds

At question is whether a temporary cap on funds makes retroactive payments moot, even as insurers upheld their part of the bargain under the ACA.

Susan Morse, Senior Editor

The Supreme Court on Monday agreed to hear oral arguments in a case brought by insurers to get billions in retroactive risk corridors payments they say they are owed by the federal government.

Land of Lincoln Mutual Health Insurance Company in Illinois, Moda Health, Maine Community Health Options and other insurers are looking to the Supreme Court to overturn an appeals court decision in favor of the government. Separate cases brought by these insurers have been consolidated.

The Supreme Court will hear oral arguments for one hour, during its October session.

The question being considered is whether a temporary cap on appropriations may be construed to do away with retroactive payment obligations, when insurers have already performed their part of the bargain under the statute.

IMPACT

At stake is billions of dollars insurers say they are owed for keeping premiums affordable during the early years of the Affordable Care Act market.

The ACA promised the funds, based on a statutory formula, for three years, from 2014 to 2016.

THE LARGER TREND

Risk corridors was one of three programs established under the ACA to provide financial stability and incentive for insurers to enter the market.

Reinsurance, which was also established for three years, provided payment to plans that enrolled higher-cost individuals. The third program, risk adjustment, was set up to become a permanent redistribution formula to fund plans with higher-risk enrollees from plans that had lower-risk members.

But Congress balked at spending funds it had never authorized. The programs became budget neutral. Insurers were paid part of what they were owed under risk corridors.

In 2017, the Centers for Medicare and Medicaid Services said it still owed insurers $12 billion in risk corridors payments.

In 2018, $11.5 billion in risk corridors payments were removed from the Department of Health and Human Services budget.

The case went to court. On appeal, the Federal Circuit determined the government had no further financial obligation.

ON THE RECORD

"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," said Matt Eyles, president and CEO of America's Health Insurance Plans. "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."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com