Obama administration may use obscure fund to pay billions to ACA insurers
By Amy Goldstein
September 29 at 12:25 PM - The Washington Post
The Obama administration is maneuvering to pay billions of dollars the
government owes to health insurers under the Affordable Care Act, potentially
resorting to an obscure Treasury Department fund intended to cover federal legal
claims.
Justice Department officials have told several health plans suing the
government over the unpaid money that they are eager to negotiate a broad
settlement, which would allow the administration to compensate about 170 other
insurers selling coverage in ACA marketplaces, according to insurance executives
and lawyers familiar with the talks.
The efforts in recent weeks reflect the partisan thorns that still surround
the sprawling law six years after its passage. The payouts probably would be
made from the Judgment Fund, a 1950s creation that is allowed as much money as
it needs to satisfy valid claims against the government. Such a move would
bypass congressional Republicans, who have criticized certain ACA provisions as
industry gbailoutsh and blocked the Health and Human Services Department from
paying health plans what they are owed.
In the waning months of the Obama White House, administration officials are
continuing their upbeat portrayal of all aspects of the health-care law, one of
President Obamafs main domestic achievements. Behind the scenes, they think that
settling these claims — $2.5 billion for 2014 and an as-yet-undisclosed sum
for 2015 — is crucial to the exchangesf well-being at a time when the high cost
of covering ACA customers has driven some small insurers out of business and
prompted several large ones to defect from marketplaces for the coming year.
gItfs a legacy item for the White House,h said Dan Mendelson, president of
the health consulting firm Avalere and an adviser on the payout effort. gItfs
more than just a lawsuit. Itfs really about the future . . . and stability of
these markets.h
Even with a settlement still uncertain, GOP lawmakers are beginning to cry
foul. gItfs an end run on the clear . . . intent of Congress,h said Rep. H.
Morgan Griffith (Va.).
The money in question involves one of three strategies to help coax insurers
into the ACA marketplaces by promising to cushion them from unexpectedly high
expenses for their new customers. This particular strategy, known as grisk
corridors,h was for the marketplacesf early years, when it was unclear how many
people would sign up and how much medical care they would use.
The risk corridors started in 2014 and run through this December. The idea,
patterned after a similar arrangement for health plans that sell Medicare drug
benefits, is to balance out insurersf costs by requiring those with unexpectedly
low expenses to pay into a fund that would be used to compensate companies with
unexpectedly high expenses. The program originally was not supposed to pay for
itself, but two years ago the Republican-led Congress restricted HHS from using
any of its other money for that purpose.
The crunch first became apparent last fall, when federal health officials announced that they could make less than $400 million in
2014 risk corridor payments — just 12.6 percent of $2.9 billion
overall. About 175 insurers are owed money, according to an HHS list.
Health officials have not said how many insurers need to be paid for 2015,
how much they are due or how much money is available. But in a five-paragraph
memo this month, HHSfs Centers for Medicare and Medicaid Services (CMS) said
that any available money will be put toward what the government still owes for
the previous year.
The risk corridor payments are gan obligation of the federal government,h
Andy Slavitt, CMSfs acting administrator, told a recent House hearing.
The shortfall has contributed to the collapse of more than half of the 23
nonprofit, consumer-oriented health plans created under the ACA. Four of those
co-ops are among the seven insurers suing the government, the most recent this
week.
CMS spokesman Aaron Albright referred questions to the Justice Department.
Justice spokeswoman Nicole Navas declined to confirm the settlement talks
because the litigation is pending.
One health plan executive, whose attorney has spoken with Justice officials,
said the department is trying to reach an agreement with suing insurers in the
next two weeks on what percentage of the remaining $2.5 billion would be
paid out for 2014, as well as for a 2015 amount. At that point, the same offer
would be made to every other insurer owed money. A judge would need to approve
the arrangement, according to the executive, who spoke about the pending
litigation on the condition of anonymity.
Treasuryfs Judgment Fund would most likely be the source of the money, the
executive and others involved said. The fundfs website shows that it has been
used for a few hundred claims against HHS in the past decade. Taken together,
they amounted to about $18 million — a fraction of what the insurers are
owed.
News of the settlements talk Thursday morning prompted an immediate online
debate, with some people condemning the potential use of Treasuryfs fund for the
payments and others wondering whether those should be guaranteed through the
risk corridorsf third year as well.
Stephen Swedlow, a lawyer for Health Republic Insurance in Oregon, a co-op
that was forced to close early this year, said he is preparing a settlement
proposal to send to Justice. Said Health Republic chief executive Dawn Bonder:
gI donft think DOJ is making a secret that they would like [the lawsuits] to go
away.h