Insurers' CSR reimbursement for 2017 gets the boot in new White House proposal

The White House on Thursday encouraged Congress to pass legislation that does not authorize cost-sharing reduction payments for insurers in 2017, even though individual market insurers had to pay into the program on behalf of their low-income enrollees.

The Trump administration's proposed language, obtained by Modern Healthcare, could nullify claims insurers might make for unpaid CSRs, as it clarifies that insurers are on the hook to pay back any of the excess money paid out by the federal government before President Donald Trump cut off CSRs starting Oct. 1, 2017.

A few insurers have already filed lawsuits against the federal government over unpaid CSRs from 2017, including the Maine Community Health Options co-op and South Dakota's Sanford Health Plan.

Previous iterations of stabilization language from Capitol Hill funded the CSRs for 2017, but as of deadline multiple congressional aides did not confirm whether the latest draft includes those payments.

The proposed language from the White House adds an extra dimension of indicating how the administration may deal with insurers should Congress fail to authorize CSRs for 2017. The CMS could claw back this money through the reconciliation process, a contingency that insurers have been watching for since Trump cut off the payments. As of deadline, a spokesperson for HHS did not respond to a request for comment on how the administration might handle these payments.

"Notwithstanding any other provision of law, there is no obligation under this act or any other act, including the Patient Protection and Affordable Care Act, to make payments on or after October 1, 2017 for purposes of reconciling any such cost-sharing reduction payments made for benefit years 2016 or 2017," the White House proposed legislation reads.

A clawback would mean a financial hit for plans, said Deep Banerjee, an analyst for S&P Global Ratings, because they set their 2017 rates assuming a full year of CSR payments.

Once Trump cut off the payments, insurers began applying the surplus money they had received from the federal government to the CSRs they were still obligated by law to pay for their enrollees.

According to the administration's proposed text, insurers would not be able to get out of making these CSR payments despite the government's action.

"Nothing in this subsection shall be construed as affecting the requirement of issuers … to reduce cost-sharing," the proposed legislation states.

A White House spokesperson said while the administration supports CSRs for 2019 and 2020, in subsequent years the White House "expects Obamacare to be replaced with a better system."

The proposed legislation also shows the escalation of the White House effort to insert its policy suggestions into the individual-market stabilization negotiations lawmakers have been trying to finish in time to attach the measure to the upcoming spending omnibus.

The House hopes to release its spending omnibus bill on March 15, but senior GOP and Democratic aides on Thursday said the negotiations are growing increasingly difficult as the White House escalates its demands that include statutory language to allow the auto-renewal of short-term plans.

HHS Secretary Alex Azar told reporters on Thursday that the department is seeking comment on its legal authority to allow auto-renewals for short-term plans. In the absence of that, the administration wants Congress to grant clear authority to HHS to offer those renewals, he said.

Other issues also have complicated Congress' negotiations. Some conservative House Republicans are also ratcheting up their demands for policies that are nonstarters for Democrats, including defunding of Planned Parenthood, cuts to Title X family planning grants and more, according to a Democratic aide close to negotiations.

In addition, Democrats and Republicans on the health appropriations subcommittees are at odds over $3 billion in budget offsets known as "changes in mandatory programs," which includes Title X family planning. Republicans don't want these offsets. Appropriators in both chambers must settle this before the final package can come together.