Louisville, Ky.-based Humana will write off $591 million in risk corridor receivables outstanding as of Sept. 30 of this year because of a recent court ruling stating the federal government is not obligated to pay risk corridor payments under the ACA's risk stabilization program.
The U.S. Court of Federal Claims ruled in favor of the government Nov. 10 in a case involving Chicago-based Land of Lincoln Health, which was liquidated Oct. 1. The insurer sought payments owed under the risk corridor program, which is designed to temporarily level the financial playing field for payers by limiting both unexpectedly high gains and losses associated with participating in a new insurance market.
However, the court rejected Land of Lincoln's statutory claims for the payment.
In a release, Humana stated, "Given this court decision, however, [Aetna's] conclusion with respect to the ultimate collectability of the receivable has shifted, and accounting rules require that the receivable be written off."
Humana expects to collect about $8 million in risk corridor payments associated with the 2014 plan year.