US ordered to cough up $1.59B in subsidies to Kaiser, Oscar, other payers

Dana Elfin Oct. 25, 2019

Dive Brief:

• The government owes a total of $1.59 billion in cost-sharing reduction payments to insurance companies offering plans in the Affordable Care Act exchanges, Chief Judge Margaret Sweeney of the U.S. Court of Federal Claims said in a judgment entered Tuesday in a class-action lawsuit involving more than 90 payers.
• The latest move in the case orders the government to pay insurers including Oscar Health, Blue Cross Blue Shield of South Carolina and Optima Health for CSRs that weren't paid for 2017 and 2018. The order and judgment follow a February ruling finding insurers were owed CSR payments for both 2017 and 2018 even though they increased premiums of silver tier ACA plans to boost premium tax credits, a practice known as "silver loading," to make up for the CSR shortfall.
• While the government argued paying insurers the CSRs for 2018 would allow them to double dip, Sweeney rejected that argument and ordered the government to pay CSRs for 2018, too, finding the tax credits and CSRs weren't "substitutes for each other."

Dive Insight:

CSR payments, intended to reimburse insurers for covering sicker beneficiaries, have turned into a battleground between payers and the federal government. Litigation over the payments dates back to late 2014 when Republicans in the House of Representatives sued HHS over the payments.  

In October 2017, the Trump administration suddenly stopped the payments, drawing insurers' ire and lawsuits from Democratic state attorneys general and insurers. 

The case at bar, brought by Common Ground Healthcare Cooperative, sought to recover the payments for itself and other insurers the payments the government failed to make in 2017 and 2018. The government argued among other things it didn't owe the payments because Congress never appropriated funds for the CSR program. But the court rejected the government's argument finding instead that the government was obligated to make the payment under the ACA regardless of whether Congress appropriated the funds.

The government's loss — if it stands — will require it to make substantial payments to numerous insurers from $220.3 million to Kaiser Foundation Health Plans to smaller payments like $2.8 million to Western Health Advantage. The government has so far appealed several other similar rulings in favor of insurers on CSRs and is likely to appeal this one. It has 60 days from the date of the judgment to do so.

https://www.healthcaredive.com/news/us-ordered-to-cough-up-159b-in-subsidies-to-kaiser-oscar-other-payers/565845/