The U.S. Department of Justice wants to escape two insurer lawsuits accusing it of shorting them of hundreds of millions of dollars in the Affordable Care Act's much-maligned risk-corridor program by claiming they weren't guaranteed the massive payouts in the first place.
The DOJ asked the U.S. Court of Federal Claims to dismiss similar lawsuits from Moda Health and Blue Cross and Blue Shield of North Carolina that demand a combined $338 million in risk-corridor payments for 2014 and 2015. According to the Obama administration, those payments aren't due until the end of the three-year program, and it's unclear how large the ultimate sum will be.
The briefs mark a stronger stance by the DOJ as it fights a growing number of risk-corridor lawsuits and could signal that the administration will sharply cut back its projected payment obligations.
So far, health insurers have only been able to pay out 12.6% of insurers' requests for risk-corridor payments, as the program has taken in far less in contributions than its projected payouts. But DOJ says the program is meant to be budget-neutral, and HHS isn't obligated to dole out more funds than it receives.
“Although Congress expressly appropriated funds in the ACA for many programs and authorized funding for others, Congress did not include in the ACA either an appropriation or an authorization of funding for risk corridors,” DOJ's motion in the Moda suit said.
Portland, Ore.-based Moda sued the federal government in June, seeking $191 million in overdue risk-corridor payments. A day later, Blue Cross and Blue Shield of North Carolina filed its own lawsuit for $147 million in back payments.
The risk-corridor program was created in the ACA as a safety net that would curb losses and profits in the first three years of the health insurance exchanges. Plans with greater than expected medical claims could recoup some of those losses, while insurers with lower than expected costs would pay into the program.
The program hasn't been without controversy. Several co-ops have dropped out of the insurance market entirely, blaming hefty risk-corridor liabilities for their failures. GOP lawmakers have also criticized and challenged the program in Congress.
But DOJ says HHS hasn't even finalized the 2015 risk-corridor payments, and the insurers are substituting their own calculations for the agency's work. Even if the insurers' proposal was right, their requests are premature, according to according to the intent when Congress established the program and HHS' implemented it.
“Even if that intent were unclear when the Affordable Care Act was enacted in 2010, Congress removed any ambiguity when it enacted annual appropriations laws for fiscal years 2015 and 2016 that prohibited HHS from paying risk corridors amounts from appropriated funds other than collections,” DOJ said. “Thus, Moda has, to date, received all the payments it is owed.”
DOJ's tougher defense comes just weeks after CMS allegedly signaled in an internal memo that it would be willing to settle the string of risk-corridor lawsuits. The CMS alerted health insurers last month that it would not make its 2015 risk-corridor payments because the collections would be used to pay the $2.5 billion gap in program funding from 2014.