The state of the ACA’s risk cor­ri­dors

Modern Healthcare - - NEWS - By Shelby Liv­ingston

The Obama ad­min­is­tra­tion is now on the hook for more than $8 bil­lion in pay­ments to cover health in­sur­ers’ losses in the Af­ford­able Care Act mar­ket­places, and in­dus­try ex­perts doubt the full tab will be paid.

But even though Repub­li­can law­mak­ers have blocked the cur­rent ad­min­is­tra­tion from pay­ing in­sur­ers what they call a “bailout,” they don’t want the blame for caus­ing insurance mar­kets to col­lapse. Any re­place­ment plan for the ACA would re­quire pri­vate in­sur­ers to jump on board, and Congress would risk alien­at­ing them by re­fus­ing to pay promised funds.

The fed­eral gov­ern­ment owes in­sur­ers roughly $8.3 bil­lion from the ACA’s risk-cor­ri­dor pro­gram to off­set losses on the ex­changes from 2014 and 2015. In­sur­ers are owed more than $5.8 bil­lion in net riskcor­ri­dor pay­ments for 2015 alone, ac­cord­ing to the lat­est CMS data.

All told, the fed­eral gov­ern­ment is barely mak­ing a dent in the mount­ing re­quests for pay­ments, largely be­cause Congress re­quired the pro­gram to be bud­get-neu­tral.

The risk-cor­ri­dor pro­gram was es­tab­lished un­der the ACA to help off­set in­surer losses in the first three years of the ex­changes. The pro­gram, which ex­pires at the end of the year, was de­signed to dis­cour­age in­sur­ers from hik­ing pre­mi­ums be­cause of uncer­tainty in who would en­roll in their plans. It works by re­quir­ing prof­itable in­sur­ers to pay funds into the pro­gram, while plans with higher med­i­cal claims re­ceive money. A sim­i­lar riskcor­ri­dor pro­gram ex­ists in Medi­care Part D, which was cre­ated un­der Repub­li­can Pres­i­dent Ge­orge W. Bush.

But the ACA’s pro­gram hasn’t worked as planned. The gap be­tween what some in­sur­ers are pay­ing in and what oth­ers are re­quest­ing is widen­ing. In Oc­to­ber 2015, the CMS said it would pay just 12.6% of the risk-cor­ri­dor re­quests for 2014. The rest of the pay­ments would be paid from 2015 and 2016 col­lec­tions.

Sev­eral in­sur­ers are su­ing to re­coup over­due pay­ments. While they have strong cases, a fa­vor­able court de­ci­sion may not be enough, said Ni­cholas Ba­gley, a law pro­fes­sor at the Univer­sity of Michigan. Repub­li­can law­mak­ers are mov­ing to pro­hibit the CMS from us­ing fed­eral funds, par­tic­u­larly the Judg­ment Fund, to set­tle the law­suits.

If a bill ti­tled the HHS Slush Fund Elim­i­na­tion Act is passed, “in­sur­ers are out of luck,” Ba­gley said. “Congress’ most im­por­tant con­sti­tu­tional author­ity is the power of the purse, and no court will ab­ro­gate that con­sti­tu­tional prerog­a­tive.”

Some health plans aren’t owed a dime since they had health­ier ACA en­rollees, but oth­ers are wait­ing for mas­sive pay­ments.

Blue Cross and Blue Shield of Texas, for in­stance, has racked up the big­gest tally in risk-cor­ri­dor pay­ments at $916.8 mil­lion for 2014 and 2015, ac­cord­ing to a Mod­ern Healthcare anal­y­sis of the CMS data. The CMS said it will pay $9.8 mil­lion to­ward the health plan’s out­stand­ing 2014 re­quest from money col­lected for the 2015 ben­e­fit year.

Other Blues are also high on the gov­ern­ment’s IOU list: Blue Cross and Blue Shield of Illi­nois is owed $488.7 mil­lion for the first two years, while the CMS ex­pects to pay $6.5 mil­lion to­ward its 2014 re­quests. Health Care Ser­vice Corp., head­quar­tered in Chicago, owns the Illi­nois and Texas Blues.

Across all plans af­fil­i­ated with the Blue Cross and Blue Shield As­so­ci­a­tion, risk-cor­ri­dor pay­ments to­tal $3.6 bil­lion after charges, ac­cord­ing to the anal­y­sis. Nearly all the Blues plans par­tic­i­pated in the ACA’s ex­changes, and in some places they were the only ones avail­able.

Among the na­tional in­vestor-owned com­pa­nies, Hu­mana is owed the most: $449.3 mil­lion for the first two years. The Louisville, Ky.-based in­surer said it has col­lected about $30 mil­lion of that so far. The CMS ex­pects to pay another $8.1 mil­lion. Last week Hu­mana said it would write off “es­sen­tially all of the $591 mil­lion” the com­pany cal­cu­lated it was owed un­der the pro­gram as of Sept. 30.

While Repub­li­can law­mak­ers are com­mit­ted to dis­man­tling the ACA and the risk-cor­ri­dor pro­gram along with it, it’s pos­si­ble some of the pay­ments will be made as a bridge from re­peal to re­place.

“There’s been a lit­tle noise that some Repub­li­cans may be re­luc­tant to have the health insurance mar­kets col­lapse un­der their watch,” said Ti­mothy Jost, a law pro­fes­sor at Wash­ing­ton and Lee Univer­sity. “The ob­vi­ous way to keep the mar­kets from col­laps­ing is to pay out the risk cor­ri­dors.”

Source: Mod­ern Healthcare anal­y­sis of CMS data

*In­cludes all plans af­fil­i­ated with the listed in­surer and that par­tic­i­pated in the risk- cor­ri­dor pro­gram. **Cal­cu­lated by com­bin­ing risk- cor­ri­dor pay­ments and charges from 2014 and 2015 ben­e­fit years. To­tal does not re­flect what may have been paid to­ward 2014 risk- cor­ri­dor re­quests pre­vi­ously.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.