Blue Cross and Blue Shield of North Carolina and Moda Health Plan have joined the list of health insurers suing the United States of America over the U.S. government's failure to make public exchange plan risk corridors program payments to insurers.
Both insurers have filed their suits in the U.S. Court of Federal Claims.
Moda Health is seeking $180 million in Patient Protection and Affordable Care Act (PPACA) risk corridors program payments.
North Carolina Blue is seeking $147.5 million in payments.
Health Republic Insurance Company of Oregon was the first carrier to sue the USA over the USA's PPACA risk corridors payment programs. Health Republic said it was owed a total of $22.1 million in risk corridors program money for 2014 and 2015, and it sued for about $5 billion in payments on behalf of all affected insurers.
Highmark, a big Blue Cross and Blue Shield carrier in Pennsylvania, sued for $223 million in May.
The United States has not yet file a response to either company's complaint. Charles Canter, the lawyer representing the USA in the Health Republic case, is supposed to file an answer on behalf of the USA in that case by June 24.
The risk corridors program was supposed to give insurers the confidence to participate in the PPACA public exchange program and hold rates down, in spite of major new underwriting rules and benefits requirements. PPACA calls for the U.S. Department of Health and Human Services (HHS) to run the program by drawing cash from PPACA public exchange plan issuers that did well in 2014, 2015 and 2016, and using the cash to help exchange plan issuers that did poorly in those years.
Congress later prohibited HHS from using taxpayer money or any funds other than program user fee revenue to make program payments.
Kevin Counihan, the director of the HHS Center for Consumer Information & Insurance Oversight (CCIIO) and the head of the PPACA public exchange program, said in July 2015 that state regulators should assume the PPACA risk corridors program would be able to make good on payment obligations for 2014 and 2015.
In October, CCIIO announced that it would collect only enough revenue to pay about 13 percent of 2014 risk corridors program claims.
The cases could impact health insurance agents and brokers by affecting how interested insurers are in selling coverage through the PPACA exchange system and what the coverage will cost.
The cases could also affect insurers' interest in selling Medicare Advantage plans, Medicare Part D prescription drug plans, managed Medicaid plans and other plans set up in such a way that insurers are depending on federal agencies to make payments after services have been provided.
For a look at key details from the new risk corridors suit pleadings, read on.
1. A top HHS lawyer assured North Carolina Blue in May 2014 that HHS had approval from Congress to pay risk corridors program bills.
North Carolina Blue has included a document showing why it depended on the performance of the PPACA risk corridors program in an exhibit submitted along with its complaint.
In a letter dated May 20, 2014, William Schultz, who was then the HHS general counsel, told North Carolina Blue that HHS had the authority to make corridors program payments through 2019, under Section 1342 of PPACA, and under the Consolidated Appropriations Act, 2014.
In the letter included in the packet, Schultz says the appropriation lets HHS spend risk corridors program revenue on program payments. Schultz and North Carolina Blue do not appear to discuss what would happen if the program collected less user fee revenue than needed to make the payments.
