Health insurer Humana has filed a lawsuit against the US government to recoup more than $611m in unpaid payments from the Affordable Care Act’s (ACA) risk corridor programme between 2014 and 2016.
The case filed in the US Court of Federal Claims accuses the Centers for Medicare & Medicaid Services (CMS) for persuading insurers to participate in the health insurance exchanges established by the ACA by promising to support them financially if they sustain significant losses.
CMS operates as a federal agency within the US Department of Health and Human Services (HHS) that administers the medicare programme and works in collaboration with state governments in the US.
In the lawsuit the insurer alleges that CMS failed to follow through with the ACA’s risk corridors payments, which help offset costs associated with consumers having lots of health problems and high health care costs.
Under the risk corridors programme, the government collected payments from insurers if their premium revenue exceeded claims costs by a certain amount. Subsequently, the government redistributed the payments to insurers whose premium revenue was lower than claims costs by a certain amount.
The government fell short on the payments in 2014, when it collected $362m in risk corridors payments, however, it owed approximately $2.87bn to struggling insurers.
According to the lawsuit, the CMS owes Humana about $244m for 2014, $214m for 2015 and $191m for 2016.
The insurer argued that the government’s failure to make full and timely risk corridors payments is a material breach of the implied-in-fact contract which has damaged its business.
Humana requested the court to order the US government to pay damages of $611m as well as court costs, litigation expenses and attorneys’ fees.