Silver Loading Limits Insurers' CSR Payout

by Leslie Small

Health insurers that sued to recoup halted cost-sharing reduction (CSR) payments scored a key victory on Aug. 14 when a federal appeals court confirmed that the government must reimburse them for providing subsidies to low-income Affordable Care Act exchange enrollees. But the court also moved to significantly limit the amount of money insurers can recoup.

In Sanford Health Plan v. United States — a case involving two insurers that sued for 2017 CSR payments — the Court of Appeals for the Federal Circuit agreed with a lower court ruling that the federal government owes the health plans about $1.6 million combined. In Community Health Choice v. United States, which addressed two suits from insurers seeking 2017 and 2018 payments, the three-judge panel said the insurers can only be compensated for losses incurred in 2018 and beyond that weren't already mitigated by silver loading — the process by which insurers raise benchmark silver-plan premiums to compensate for lost CSR payments.

The appeals court remanded Community Health Choice back to the lower courts to grapple with the complex question of how to calculate those damages.

"I imagine that there's quite a few actuaries at this point trying to come up with a ballpark estimate as to incremental damages that might be out there for the insurers that silver loaded," says David Anderson, a research associate at the Duke-Margolis Center for Health Policy. "My opinion is, for insurers that silver loaded in 2018 to present, there probably will not be much net damages that could be applied for federal reimbursement."

In a Health Affairs blog post about the recent CSR decisions, attorney Katie Keith argued that all parties involved with CSRs and silver loading are likely to maintain the status quo.

For health insurers, "there's no incentive to not silver load and then go to court to try to get the CSRs that you were owed," she says. That's because it would make little sense to give up the security of being able to bake CSR costs into premiums every year in the hopes of collecting damages through a lengthy legal process. "And I think there's a lot of people who think that's a better outcome for consumers, too," given that "silver loading means more generous premium tax credits for low-income consumers," Keith adds.

From Health Plan Weekly

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