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Insurers unlikely to recoup much of unpaid risk-corridor payments

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Sanford Health Plan,  the insurance unit of Sioux Falls, S.D., Sanford Health, has  sued the U.S. government to recoup unpaid payments under the risk-corridor program set up under the Affordable Care Act. However, they’re unlikely to get their money.
Sanford  is asking that the Feds pay nearly $9 million in overdue risk-corridor payments for 2014 and 2015. A complaint  that it filed in the U.S. Court of Federal Claims says that CMS has so far paid Sanford Health Plan only 15.1 percent of the amount that it owes.

Modern Healthcare reports that “Sanford Health Plan is the only insurer owned by a hospital system that has sued over the missing payments, which were meant to offset major losses during the first few years of ACA implementation. But it’s far from being the only provider-sponsored plan with an unpaid risk-corridor tab. Driven largely by the movement toward value-based care, many health systems entered the insurance space. Several have been successful, but the move has been difficult for many.”

In another disillusioning example, Scott & White Health Plan, run by Dallas-based Baylor Scott & White Health system, left the federal insurance marketplace this year based in part on almost $23 million in unpaid risk-corridor payments, a system spokeswoman told the news service.

Modern Healthcare reported that some insurers participating in the exchanges “never expected to receive the risk-corridor payments. They didn’t budget the payments into pricing and ended up being fine.”

“They look very smart in hindsight,”  Emily Wadhwani, a director at Fitch Ratings, told the news service.

The CMS owes insurers  about $8.3 billion to cover risk-corridor losses in 2014 and 2015.

But, the news service reports, “a victory in February for Moda Health may give insurers some hope. A federal claims judge ruled the Justice Department owes the insurer $214 million in payments as part of its participation in the program, saying the government ‘made a promise’ to insurers.”

It doesn’t look as if the Trump administration will help the insurers.  House Republicans’ 123-page American Health Care Act didn’t even mention the program, which expired at the end of last year.

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