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Updated HHS budget cuts $11.5 billion in risk corridor payments

Insurers have sued over the lack of payments that were part of Affordable Care Act measures to make up for any losses in the marketplace.

Susan Morse, Senior Editor

Credit: <a href="https://en.wikipedia.org/wiki/United_States_Department_of_Health_and_Human_Services#/media/File:DHHS2_by_Matthew_Bisanz.JPG">Matthew Bisanz</a>.Credit: Matthew Bisanz.

The Department of Health and Human Services budget has been updated to reflect the removal of $11.5 billion in risk corridors payments that have become the basis for health insurance lawsuits against the government.

The Department of Justice wrote a February 20 letter to the clerk of the U.S. Court of Appeals Court in Washington, D.C. clarifying the issue, after the attorneys for the insurers argued that the $11.5 billion budget item supported their argument for the payments.

[Also: After staggering Q2 loss, Molina healthcare scores court victory over $52 million in risk corridor payments]

The DOJ essentially said the amount put in the budget was in error, and has been fixed in a budget update released Monday. The government has no unfunded obligation under the program, the letter said.

"That budget document reflected an accounting treatment that was used by the agency during the initial administration of the risk-corridors program," the DOJ said in the letter. "The program periods for collecting funds have concluded and HHS has made accounting adjustments to reflect that termination."

[Also: CMS says it owes insurers $12 billion in risk corridor payments; See the list]

Risk corridors was among three programs established under Affordable Care Act to help insurers limit their losses in the marketplace. The three-year temporary program in effect from 2014 to 2016, has expired.

Risk corridor payments reportedly add up to more than $12 billion from insurance losses in the exchange markets.

Moda Health and Land of Lincoln Health are among the insurance companies that have sued the government for not fully paying the risk corridor funds they say they are owed.

Oral arguments were heard on January 10.

The President's 2019 Health and Human Services updated budget also includes $697.7 billion in net deficit savings over 10 years from the repeal and replacement of the Affordable Care Act.

"The President is committed to rescuing states, consumers and taxpayers from the failures of Obamacare, and supporting states as they transition to more sustainable healthcare programs that provide appropriate choices for their citizens," the updated budget states.

The budget supports enactment through legislation and Medicaid reform, including the repeal of Medicaid expansion, and to allow states to certify qualified health plans regardless of their exchange model.

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

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