Health insurer Highmark is suing the federal government to recover money owed under the risk-corridor program for plans sold on the Affordable Care Act's insurance exchanges.
The lawsuit, filed in the U.S. Court of Federal Claims, argues Highmark is owed at least $223 million in risk-corridor payments. The ACA established risk corridors and two other risk-mitigation programs to help insurers weather the uncertain environment in the first few years of expanded health coverage.
However, Republicans in Congress stymied the risk-corridors program, calling it an insurance industry bailout, thereby allowing HHS to pay only 12.6% of risk-corridor payment requests for 2014. The same will hold true for 2015 risk-corridor payments. Medicare Part D has its own version of risk corridors.
HHS has reiterated its desire to make health plans whole, but so far has not been able to pay out anything beyond what has been appropriated.
“Given the federal government's failure to honor its obligations, even after repeated assurances that it would do so, we have no choice but to file litigation,” Highmark Health CEO David Holmberg said in a statement. “We have a fiduciary responsibility to our 5.2 million health plan members to seek payment.”
Highmark, a Blue Cross and Blue Shield affiliate based in Pittsburgh, and numerous other insurers cumulatively have lost billions of dollars from their individual plans sold on the exchanges. Many people who signed up for coverage sought costly medical care. Many of the newly covered consumers previously couldn't afford to buy insurance because of their health conditions.
In 2015, Highmark lost $590 million on its health plans that were sold on the ACA exchanges. In the first two years of the exchanges, Highmark's losses have exceeded $700 million, Holmberg wrote in a blog post explaining the lawsuit.
In April, Holmberg said, Highmark met with government officials “regularly to discuss how they plan to honor their commitment.” Highmark Health—the parent company of Highmark and Allegheny Health Network, a system of hospitals and doctors that rivals Pittsburgh-area giant UPMC—previously estimated an unpaid risk-corridor balance of $500 million.
Highmark is not the first health insurance company to sue HHS over the unpaid funds. In February, Health Republic Insurance Company of Oregon, one of the ACA's not-for-profit co-ops that was forced to close, filed a class-action lawsuit that said it and other insurers were owed $5 billion in risk-corridor payments.