Highmark Affordable Care Act suit could prompt copycats
By Kris B. Mumula / Pittsburgh Post-Gazette
May 19, 2016 12:00 am
Highmark could soon be in good company in suing the federal government over Affordable Care Act reimbursement.
Other insurers have contacted Highmark since the Pittsburgh carrier filed a lawsuit Tuesday over reimbursement for losses incurred in providing coverage under the ACA, president and CEO David Holmberg said Wednesday. The companies are weighing their options to recoup billions of dollars they say are owed, he said.
“The losses were pretty significant,” Mr. Holmberg said. “We ended up with the other companies standing here holding the bag. We saw no path forward.”
Highmark, the fourth-largest Blues company and dominant provider of ACA coverage in Pennsylvania, Delaware and West Virginia, sued the federal government in the U.S. Court of Federal Claims for $223 million in losses sustained in 2014. In addition, Highmark says it will be owed another $500 million for losses on member claims by July when a government accounting is due.
Through a risk-sharing tool called risk corridors, the government had promised to pick up a share of the losses during the early years of the Affordable Care Act because insurers had little information about setting appropriate rates for a new population.
Instead, insurers received payment for only about 12.6 percent of the amount claimed — $362 million for $2.87 billion in losses claimed by the carriers, according to Ursula Taylor, partner at the Chicago law firm of Butler Rubin Saltarelli & Boyd LLP.
“It is a holy mess,” Ms. Taylor said. “This is a nationwide issue and it affects plans everywhere. Litigators are just beginning to pay attention to this.”
Highmark’s lawsuit is among a handful that have been filed nationwide over risk corridor reimbursement, but among only a few asserting that the government breached a contract with insurers. Other challenges have focused on the wording of the ACA, which was enacted in 2010.
Highmark lost $222 million in the Affordable Care Act market in 2014 and $590 million in 2015.
The newly insured had inpatient hospitalization rates 57 percent higher, 49 percent higher rates of chemotherapy and 43 percent higher rates of congestive heart failure when compared to commercially insured members, Mr. Holmberg said, all of which drove the losses.
At issue in the dispute is whether the ACA created an obligation for the reimbursement, according to Sandra Durkin, associate at Butler Rubin.
Reimbursement money for insurers was not part of Congressional spending bills for fiscal 2015 and 2016.
The ACA lawsuit is the latest of some big issues that Highmark has taken on since Mr. Holmberg was named CEO, including ending reimbursement to doctors for a controversial surgical procedure and mounting a court challenge to facility fees charged by some hospitals for cancer and other kinds of care.
Mr. Holmberg said the Highmark board was supportive of these efforts.
“The future of health care may get decided here in Pittsburgh,” he said. “We’re not thinking like everybody has done.”
Kris B. Mamula:firstname.lastname@example.org, or 412-263-1699