Republicans question legality of potential settlements for insurers

Republicans on the House Energy and Commerce Committee have asked for HHS to explain how the agency plans to settle lawsuits from health insurers over the multi-billion dollar shortfall in the Affordable Care Act’s risk corridor program.

The letter to HHS Secretary Sylvia Burwell followed comments from CMS Acting Administrator Andy Slavitt, who said Sept. 14 the agency is “open to discussing resolution of claims” related to the risk corridor program. At least five insurers have sued HHS over being paid only 12.6 percent of the amount insurers requested for the first year the ACA exchanges were open, leaving a $2.5 billion shortfall which will require using funds from 2015 transfers, pushing back that year’s payments.

The Republicans’ letter blamed the shortfall on the Obama administration, saying it both promised the program would be budget neutral and assured the insurance companies they would get 100 percent of the funds they requested to cover for significant losses in the first years of the exchanges.

By settling the lawsuits, the Republicans argued the administration would be bypassing Congress, using funds set aside for legal settlements instead of asking legislators for an appropriation.

“Since Congress acted twice to protect taxpayer dollars by prohibiting the use of federal funds to make up for any shortfall in risk corridor payments, the committee is concerned about the administration’s intent to use any federal funds to settle the suits brought by the insurance companies,” the Republicans wrote.

The members ended by requesting CMS turn over additional documents and information by Oct. 4. Among what they’re asking for is a list of all insurers which are planning on suing over the risk corridor payments, which insurers have asked about settlements, who at CMS has discussed settlements with the U.S. Department of Justice and if both departments believe it’s legal to use funds for legal settlements in this case.