Highmark sues to gain $223 million from provision in Affordable Care Act

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HighmarkDE_Pr_2cHighmark Inc. and other affiliates  announced it is filing in the U.S. Court of Federal Claims to recover damages it claims are owned through the Affordable Care Act.

The Pittsburgh health insurer earlier posted large losses from its health insurance program.

The Blue Cross insurer for Delaware stated that the lawsuit arises out of the United States’ refusal to pay in full the amounts owed to the Highmark insurers under the ACA’s risk corridor program 2014.

Highmark and Aetna are the two largest health insurers in Delaware, a state that has few companies providing coverage.

“The refusal is in breach of the government’s explicit obligations created by statute, regulation, express contracts and implied-in-fact contracts and is in contravention of the government’s public statements that induced the Highmark insurers to participate in the ACA marketplace,” a press release stated.

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The federal government created the risk corridors program to serve as a temporary stabilizing force as the individual markets moved to the ACA.

The  ACA brought new people into the health system, many of whom are less healthy than those insured in the past. In some cases, this was due to an inability to afford health insurance, due to pre-existing conditions.

Pre-existing conditions are no longer a reason to deny or sharply increase the costs of coverage, but the situation leaves insurers with few ways to recoup added costs.

Highmark claimed it  demonstrated its willingness to be a meaningful partner in the ACA program and has agreed to participate in good faith, with the understanding that the United States would honor its obligations.

Highmark states that it is owed nearly $223 million, less any prorated amounts paid by the government for CY 2014 alone.

The Centers for Medicare and Medicaid Services (“CMS”) has paid only approximately $27.3 million of this total now past due, Highmark states.

“Highmark entered the ACA markets in good faith — as encouraged by the federal government — with the assurance that the government would fulfill its legal commitments,” said Highmark CEO David Holmberg. “Given the federal government’s failure to honor its obligations, even after repeated assurances that it would do so, we have no choice but to file litigation. We have a fiduciary responsibility to our 5.2 million health plan members to seek payment.”

“Highmark remains committed to the individual insurance marketplace and its goal of guaranteeing that individuals receive the best coverage for their needs at an affordable price. Our stance has not changed,” added Holmberg. “Ensuring that the ACA market is viable for the future is a responsibility that should be shared by the entire health care community. We cannot regress and put the health of 12.7 million people at risk. It is essential we get the right premium rates, the right care delivery networks, and the right care management programs in place to stabilize the market so that it can sustain itself.”

Highmark is represented by Reed Smith LLP in the action filed in the U.S. Court of Federal Claims in Washington, D.C. on May 17.

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