A federal judge denied the Obama administration's request to pause a risk-corridor case brought by Portland, Ore.-based insurer Moda Health until courts rule on similar lawsuits.
Moda Health sued the government in June for $191 million in payments owed under the Affordable Care Act's risk-corridor program for 2014 and 2015. The CMS has paid just $11.3 million so far, and recent data from the CMS further shows that Moda is set to receive only $2.9 million on top of that from the funds collected under the program for 2015.
Moda pulled out of the insurance exchange in Alaska because it couldn't raise money to cover the missing payments.
The government argued the case should be delayed until a similar case brought by failed Illinois co-op Land of Lincoln Health is resolved and three other risk-corridor lawsuits are decided. Otherwise, the Obama administration claimed its resources would be strained.
The judge, Thomas Wheeler, said in an opinion filed Monday that the government's need for a stay of the case wasn't urgent enough. The government could consolidate the similar or identical risk-corridor cases to save resources, and moreover, Moda needs to know whether it is entitled to the payments or its business will suffer, Wheeler said.
The Moda case is just one of several multimillion-dollar lawsuits brought by insurers demanding promised payments under the risk-corridor program.
The three-year program, which expires this year, is meant to help offset insurer losses and stabilize premiums during the first few years of the health insurance exchanges by requiring financially healthy plans to pay into the program while plans with higher-than-expected medical claims receive payments.
But laws passed by Congress required the risk corridors to be budget-neutral, so it can only pay out in funds what it brings in. Currently, the CMS is paying insurers just 13 cents for every dollar requested.
And the agency recently said it will be using all of the funds taken in under the risk-corridor program this year to pay off the $2.5 billion shortfall left over from 2014 losses.
Many of the insurers that brought lawsuits to recoup these funds claim the government is contractually obligated to pay up. But Land of Lincoln Health's lawsuit was dismissed earlier this month by a federal judge who decided that the healthcare exchange agreements with insurers are not actually binding contracts. Moreover, the judge said the healthcare law's risk-corridor program does not include a time limit by which the CMS must make the risk-corridor payments.
Land of Lincoln Health, which is appealing the decision, sued in June for $72.8 million in overdue risk-corridor payments to cover losses it sustained in 2014 and 2015. So far, the government has paid the co-op little more than $550,000, and is set to pay just $150,000 more from 2015 collections under the program, according to the CMS.
Blue Cross and Blue Shield of North Carolina, defunct New York co-op Health Republic Insurance and Highmark have also brought multimillion-dollar risk-corridor lawsuits.
The Obama administration argues the payouts aren't guaranteed under the budget-neutral system.
Meanwhile, Republican senators have introduced a bill to bar the government from paying settlements in these lawsuits using federal funds.
