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Humana sues to recover unpaid ACA subsidies

Humana sues to recover unpaid ACA subsidies

Humana is the latest health insurer to sue the federal government for unpaid Affordable Care Act subsidies intended to reduce healthcare costs for low-income individuals.

In a lawsuit filed Monday in the U.S. Court of Federal Claims, Louisville, Ky.-based Humana demanded roughly $2 million in cost-sharing reduction subsidies it said it is owed for selling plans on the ACA exchanges in 2017. Humana largely exited the exchange business in 2018.

The federal government has a statutory obligation to reimburse health insurers for the unpaid cost-sharing reduction subsidies, Humana said in the complaint.

“Regardless of whether Congress appropriated sufficient funds to HHS to make the CSR payments, the government’s statutory obligation to make such payments, and plaintiff’s right to those payments, remains,” the company said.

Numerous health insurers have filed similar lawsuits demanding reimbursement for the subsidies, including several insurers that sued in recent months in the wake of an insurer victory in a U.S. Supreme Court challenge over another ACA program known as risk-corridors.

Anthem, Cigna Corp., Montana Health CO-OP and Harvard Pilgrim each filed complaints to recover unpaid cost-sharing reduction subsidies after the Supreme Court’s risk-corridor decision in April, “suggesting insurers expect a victory on CSRs,” Katie Keith, a Georgetown University law professor who tracks ACA litigation, wrote in a Health Affairs blog post. The risk corridor and CSR cases involve similar issues.

The ACA established cost-sharing reduction subsidies for individuals whose incomes were below 250% of the federal poverty level. The Trump administration abruptly ended these subsidies in late 2017, claiming that it lacked an appropriation. But the law still required insurers to reduce copayments and other cost-sharing for eligible individuals and they did so without being reimbursed.

Insurers hiked premiums in 2018 to make up for the lack of CSR payments. Because of the way ACA premium tax credits are structured, the federal government ended up paying higher premium tax credits as a result.

The government has argued that insurers’ ability to increase premiums more than made up for the loss of CSR payments; reimbursing them now would provide a windfall to insurers. Still, the U.S. Court of Federal Claims has sided with a number of insurers over the issue. Some CSR lawsuits have been stayed pending a decision in the U.S. Court of Appeals for the Federal Circuit, which heard oral arguments in January for four consolidated CSR-related lawsuits.

In a supplemental brief in the Federal Circuit in May, the insurers wrote that the Supreme Court’s risk-corridor decision “compels” the Federal Circuit to rule against the government in the CSR cases. In that case, the high court found that the government was obligated to pay insurers $12 billion in risk-corridor funds and that appropriations riders enacted later did not eliminate that obligation.

The Supreme Court “considers and rejects every argument the government has raised in this case against liability,” the insurers wrote in the supplemental brief.

The federal government, however, argued in its brief that the Supreme Court decision does not support the insurers’ case.

“Whereas the risk-corridors program was a time-limited, backwards-looking program that left more than $12 billion in unpaid government debts, the cost- sharing reduction program is an ongoing program under which insurers’ expenses are being funded by increased premiums and increased premium tax credits,” the government wrote.

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