At least five health insurance co-ops have sued the federal government since June over issues regarding the Affordable Care Act's risk adjustment program.
The program is designed to temporarily level the financial playing field for insurers by limiting both unexpectedly high gains and losses associated with participating in a new insurance market. Insurers seeing greater profits pay into a pool to compensate insurers with higher losses.
However, insurers like Lewiston, Maine-based Community Health Options, Albuquerque, N.M.-based New Mexico Health Connections, Boston-based Minuteman Health, Chicago-based Land of Lincoln Health and Baltimore-based Evergreen Health have all sued over millions they owe under the risk adjustment program.
Here are four thoughts from Ursula Taylor, attorney at Chicago-based Butler Rubin Saltarelli & Boyd, who spoke with Becker's Hospital Review about the recent litigations.
1. Ms. Taylor thinks the lawsuits hold clout. "My thought is that the risk corridor lawsuits are really strong and have a lot of legs," she says. "One need only study the U.S. Department of Justice's response to the first lawsuit [Evergreen] to see the DOJ isn't even throwing all the punches it possibly could, and could only come up with a timing argument. [This is] a huge sign these risk corridor arguments are solid."
2. Small insurers do not have much to loose. Ms. Taylor cites Evergreen as an example. "They are facing potential liquidation. For them, going after risk adjustment … why not? Larger plans have more at stake," she says. For smaller insurers, Ms. Taylor says the trend is to go for the lawsuit. "They are startups. The deck was stacked against them in that regard. To not have premium programs established has been devastating."
3. The outcomes of each lawsuit vary based on the courts overseeing the litigation. Ms. Taylor says anything can happen, though "what happened with Evergreen is a pretty strong sign of what is going to come from the other lawsuits. Evergreen is the strongest argument. New Mexico and Minuteman, they don't have the strongest evidence of risk adjustment and risk corridor going together. If you look at [Evergreen's] transcript, that is where the judge is paying attention … to be able to put off millions in risk corridor payments while demanding that risk adjustment is due."
4. Ms. Taylor foresees similar lawsuits in the future. She says insurers' "hands are tied. Plans are waiting and seeing. There will be more."
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