Skip to main content

Analysis

Supreme Court Takes Up $12B Dispute Over ACA Risk Corridor Payments

By Steven Porter  
   June 24, 2019

The justices agreed to hear arguments over whether Congress can pass riders that withhold funds in contravention of the relevant law's intent without actually repealing the relevant law.

The U.S. Supreme Court agreed Monday to take up three consolidated cases from health plans challenging Congress' refusal to authorize $12 billion in risk-mitigation payments under the Affordable Care Act.

The cases—which were brought by Maine Community Health Options, Moda Health Plan Inc., and Land of Lincoln Mutual Health Insurance Co.—argue that the ACA's risk corridor program obligated Health and Human Services to make payments that the law intended "to induce insurer participation in the health insurance exchanges by mitigating some of the uncertainty associated with insuring formerly uninsured customers."

Following the 2014 midterm election, lawmakers on Capitol Hill enacted an appropriations law for fiscal year 2015 that "would potentially allot money to HHS to cover" any such payments for the 2014 benefit year, but the law included a rider that required HHS to maintain the budget neutrality of the risk corridor program, the health plans said in their petition.

Because the amounts collected under the risk corridor program for 2014 "came nowhere close to what the government owed to insurers," the government paid out only 12.6% of the total owed for the year, prorating the funds it owed to each insurer, the health plans wrote.

Similar riders were included in appropriations bills for fiscal years 2016 and 2017. But HHS used the funds it collected from benefit years 2015 and 2016 to further pay what it owed from the 2014 benefit year, making no payments for the 2015 and 2016 benefit years, the health plans wrote. (The program ended after three years.)

Related: Is Panic Over Risk Adjustment Loss Much Ado About Nothing?

The health plans proposed two questions in the petition for a writ of certiorari for the justices to consider, but the justices agreed to hear argument only on the first: "Given the 'cardinal rule' disfavoring implied repeals—which applies with 'especial force' to appropriations acts and requires that repeal not be found unless the later enactment is 'irreconcilable' with the former—can an appropriations rider whose text bars the agency's use of certain funds to pay a statutory obligation, but does not repeal or amend the statutory obligation, and is thus not inconsistent with it, nonetheless be held to impliedly repeal the obligation by elevating the perceived 'intent' of the rider (drawn from unilluminating legislative history) above its text, and the text of the underlying statute?"

In its response to the health plans' petition, the U.S. government argued that a Government Accountability Office report identified only two possible sources of funding for the risk corridor payments: (1) the funds collected by HHS under the program itself, and (2) any lump-sum appropriation to manage certain Centers for Medicare & Medicaid Services programs. By enacting the appropriations laws as it did, Congress said that only the first funding source would be allowed, the response states.

America's Health Insurance Plans (AHIP) President and CEO Matt Eyles said in a statement that insurers need stability from the government.

"Millions of Americans rely on the individual and small group markets for their coverage and care. Health insurance providers are committed to serving these patients and consumers, working with the federal government to deliver affordable coverage and access to quality care," Eyles said. "The Supreme Court's decision to hear this case recognizes how important it is for American businesses, including health insurance providers, to be able to rely on the federal government as a fair and reliable partner. Strong, stable and predictable partnerships between the private and the public sector are an essential part of our nation's economy, and our industry looks forward to having this matter heard before the Court."

The justices allotted one hour for oral argument on the dispute.

Editor's note: This story was updated Monday afternoon to include AHIP's statement.

—Steven Porter is an associate content manager and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The health plans argue the ACA's mandate to issue risk corridor payments could not be repealed through an appropriations rider.

The approximately $12 billion in payments at issue in this dispute are for three benefit years: 2014-2016.


Get the latest on healthcare leadership in your inbox.