Land of Lincoln Health is suing the federal government, claiming the U.S. failed to pay the Chicago-based startup insurer approximately $72 million in payments owed under the Affordable Care Act's risk corridor program.
The risk corridor program 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. Insurers that saw greater profits paid into a pool to compensate insurers with higher losses.
The three-year program, which runs through 2016, fell short by more than $2.5 billion in its first year because so many insurers experienced losses in the individual market. Due to the shortfall, HHS said insurers initially would only receive 12.6 percent of the money claimed under the risk corridor program for 2014. The government also doesn't plan to make payments in full for 2015, according to the Chicago Tribune.
Land of Lincoln Health is owed approximately $4 million from 2014 and $68 million from 2015. In its lawsuit, the insurer is seeking the full amount it is owed for both years, according to the report.
Land of Lincoln Health filed suit in the U.S. Court of Federal Claims in the District of Columbia. There are at least three other suits concerning risk corridor payments pending in that court — a $2.5 billion suit brought by Oregon's shuttered co-op Health Republic Insurance Co., a $147 million suit filed by Blue Cross and Blue Shield of North Carolina and a $223 million suit brought by Highmark in Pittsburgh.
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