GAO: Feds illegally paid insurers $3B in reinsurance funds

HHS illegally made reinsurance payments to health plans using funds that should have been deposited in the federal Treasury, according to a recent report from the Government Accountability Office.  

Established under the Affordable Care Act, the reinsurance program aimed to protect taxpayers from premium increases in the individual market by offsetting the expense of high-cost individuals. Under the program, which ends this year, HHS collected money from all insurers and redistributed the funds to those plans that took on high-cost enrollees through the ACA's exchanges.

The reinsurance program was designed to collect $12 billion in 2014, $2 billion of which would be deposited in the Treasury. But the program collected only $9.4 billion in 2014, causing HHS to prioritize payments to carriers and forego payments to the Treasury.

The GAO said Thursday HHS violated the text of the health law because it did not have the authority to prioritize payments to insurers. The GAO said HHS could have distributed the money collected proportionally between insurers and the Treasury. The report found HHS improperly allocated approximately $3 billion to insurers as of July 2016.

A HHS spokesperson said the agency strongly disagrees with the GAO's opinion, according to The Wall Street Journal. HHS argued the ACA does not stipulate how funds collected through the reinsurance program should be allocated if the total amount is insufficient.

The GAO ruling is not binding on HHS activities. Republicans, who have staunchly opposed the ACA, hailed the GAO's decision.

More articles on payer issues: 

HHS may use 'obscure fund' to settle ACA risk adjustment suits
Saint Mary's, Health Plan of Nevada tussle over Medicaid payments
Individual health premiums to rise 30% in Utah

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