Insurers wait on Federal Circuit to determine fate of risk-corridor payments

Insurers on Wednesday renewed their fight to claw back billions of dollars in unpaid risk corridor payments, telling a federal appeals panel that the government legally can't default on its obligation when Congress takes away the money stream.

Three judges from the U.S. Court of Appeals for the Federal Circuit homed in on the government's argument that Congress essentially redefined the intent of the Affordable Care Act's risk corridor provision by limiting what funds could go towards the payments.

Two insurers involved in the suits — Land of Lincoln and Moda Health — claim Congress breached the risk corridor contract when it attached riders to appropriations bills in 2015 and 2016 that barred the federal government from making full risk-corridor payments. The bills limited the funds to carrier user fees.

Judge Pauline Newman, out of the three judges on Wednesday's panel, appeared the most skeptical of Department of Justice attorney Alisa Klein's claim that the insurers who contracted to sell qualified health plans on the exchanges should have understood that Congress can essentially change its mind about statute at any time.

But Klein hammered her point repeatedly, that "initial legislation doesn't matter" and that Congress through its appropriations riders essentially set a new statute.

"Even assuming [the statute] made risk corridors an entitlement, Congress can change its mind," Klein said.

Wednesday's appeals stem from two of the many lawsuits from insurance companies seeking payment on their risk corridor claims. Bankrupt Illinois co-op Land of Lincoln lost its suit in the U.S. Court of Federal Claims, which sought $76.3 million in risk corridor payments from 2014 to 2015 and $57.7 million in 2016. Oregon-based health plan Moda Health was luckier, winning its request for $214 million in unpaid risk corridor funds.

Moda's attorney Steven Rosenbaum claimed the CMS constantly promised payments to all insurers of qualified health plans. But when Congress elimiated all but one appropriations bucket, it essentially pulled the rug out from under carriers in the exchanges.

"Fifty thousand people lost insurance in the middle of the year" because Congress didn't appropriate the money, Massey said.

Susannah Luthi

Susannah Luthi covers health policy and politics in Congress for Project Japan. Most recently, Luthi covered health reform and the Affordable Care Act exchanges for Inside Health Policy. She returned to journalism from a stint abroad exporting vanilla in Polynesia. She has a bachelor’s degree in Classics and journalism from Hillsdale College in Michigan and a master’s in professional writing from the University of Southern California.

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