New Mexico insurer poised to join others suing over ObamaCare payments

New Mexico insurer poised to join others suing over ObamaCare payments
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Health insurers in New Mexico and other states are gearing up for a legal fight with the Obama administration over millions of dollars the insurers both owe and are owed under separate provisions of the Affordable Care Act (ACA).

New Mexico Health Connections, the state’s Consumer Operated and Oriented Plan, or CO-OP, confirmed to The Hill that it is working with lawyers to frame lawsuits on both ObamaCare’s risk-adjustment and risk-corridor provisions, which make up two of the so-called three Rs of the ACA’s premium stabilization program.

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New Mexico Health Connections CEO Dr. Martin Hickey said in a phone interview that the insurer plans to file a lawsuit in the coming weeks claiming that it is being over-billed by the administration on certain payments and that it has not received other promised payments from the federal government. Several other insurance companies in different states are planning to sue as well.

New Mexico Health Connections owes the Centers for Medicare and Medicaid Services (CMS) $16.4 million under the risk-adjustment methodology, which Hickey said was more than the insurer expected.

New Mexico is also still waiting for $23 million in risk-corridor payments from the CMS. Both the risk-adjustment and risk-corridor programs were meant to temporarily transfer money from insurers who perform better on the exchanges to those who do not in an effort to balance risk as the industry entered the sicker market.

A coalition — called Consumers for Health Options, Insurance Coverage in Exchanges in States (CHOICES) — of mostly small, nonprofit health insurers met Monday to discuss legal options regarding the payments, over which several insurers are already suing. Hickey declined to identify the other insurers.  

The meeting centered around the “fiduciary responsibility of members to take legal action against CMS,” Hickey said, because “the risk adjuster is so disruptive and is also leading to most everyone raising their rates into double digits.”

If the New Mexico CO-OP files suit as planned, it would be the seventh insurer to do so. Five are suing over missing risk-corridor payments, which the CMS failed to provide after Congress enacted legislation preventing the agency from funding the program from other sources. One insurer, Maryland CO-OP Evergreen Health, is suing over risk-adjustment payments, and one state, Illinois, recently ordered its CO-OP, Land of Lincoln Health, to hold off on paying its risk-adjustment bill until it received the risk-corridor funding from the CMS.

Only eight of the original 23 CO-OPs remain after Oregon’s Health CO-OP announced it was shuttering last week. The CMS on June 30 revealed what health insurers owed in 2015 risk-adjustment payments. Smaller insurers contend the methodology of those calculations is biased against them.

A spokesperson for the CMS declined to comment on legal matters, but reiterated the agency’s stance that the data show risk-adjustment payments help strike a balance between companies with sicker enrollees and companies with healthier enrollees. The agency has also proposed changes to the methodology that would account for partial-year enrollees and incorporate prescription drug utilization data.

The CHOICES meeting also laid out an alternative methodology that Hickey said “significantly reduces the volatility of risk adjustment, so there’s not so much money that changes hands.” Hickey contends that state regulators could have the authority to implement the altered methodology. The CMS in an interim rule published in May encouraged states to seek ways under their authority to improve the risk-adjustment program while the agency considered changes.

Former CMS Chief Actuary Richard Foster, who retired in 2012, was one of the architects of the new methodology, according to Hickey. Foster was an influential voice during his time at the CMS, at one point defying a Bush administration official who tried to coerce him into providing certain Medicare prescription drug cost figures to Congress. CHOICES plans to release the proposal in a white paper this week.