Monday, May 4, 2020

Supreme Court Sides With Insurers in Risk Corridors Case


The Supreme Court's near-unanimous decision on April 27 to award health insurers $12 billion in unpaid risk corridors funding was certainly a win for the industry, but it might not be as big of a windfall for insurers as it may seem, experts tell AIS Health.
During its three-year existence, the risk corridors program — in which the government shares in insurers' losses and profits — took in far less than it paid out as many health insurers struggled to make a profit in the Affordable Care Act exchanges. In dozens of lawsuits, plaintiffs claimed that CMS must make up the $12 billion shortfall, but the government claimed a provision in the 2015 omnibus spending bill blocks CMS from doing so. One consolidated case, Maine Community Health Options v. United States, reached the Supreme Court, where justices were won over by health plans’ arguments.
As Justice Sonia Sotomayor wrote for the 8-1 majority, the court's holdings "reflect a principle as old as the Nation itself: The Government should honor its obligations."
Some industry watchers weren’t surprised by the decision. "I've always found it difficult to believe that the insurers didn’t have a good constitutional basis to demand payment," Jeff Myers, senior vice president of reimbursement strategy and market access for Catalyst Healthcare Consulting, tells AIS Health.
Insurers were also pleased. "We appreciate that today's Supreme Court 8-1 decision ensures that the federal government honors the obligations it made for services the private sector already delivered," Matt Eyles, president and CEO of America's Health Insurance Plans, wrote in a statement regarding the ruling.
The $12 billion judgment in some insurers' favor could possibly hurt the industry's ability to receive funding from the government to stem any losses related to the COVID-19 pandemic and stabilize the insurance market, says Katie Keith, a research professor at Georgetown University's Center on Health Insurance Reforms and principal at Keith Policy Solutions, LLC.
Yet she points out that the court's ruling concerned payments from the ACA's temporary risk corridors program from 2014 to 2016, so "it would be a mistake to think that all of this money is going towards companies that are offering coverage now."

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