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No Funds Available for 2015 Risk Corridor Payments, CMS Says

By Erin Mershon, CQ Roll Call

September 12, 2016 --- Federal health officials will not make any of this year's scheduled payments to insurance companies under the so-called risk-corridor program of the 2010 health law.

Instead, the Centers for Medicare and Medicaid Services (CMS) said in a late Friday memo it will use funds it collected in 2015, the second year of the program, to continue to pay back the shortfalls it accrued in the program's first year. The risk corridor provision of the health law was aimed at redistributing funds from plans with relatively healthy patients to those with relatively sicker ones.

Republicans, led by Sen. Marco Rubio, R-Fla., decried the risk corridor payments as an "insurer bailout." He and his colleagues added a rider to the fiscal 2015 spending package (PL 113-235), which was carried into the next year's appropriations omnibus as well (PL 114-113). It's difficult to strike a rider once it has been added to appropriations measures. The same language also appears in both the Senate and House versions of the fiscal 2017 Labor-HHS-Education appropriations bills (S 1695, HR 3020).

As a result of the language, the program in 2014 could only pay insurers 12.6 percent of what they otherwise would have received. It is that shortfall that CMS intends to address with this year's collected funds.

Many insurance companies have decried the loss of the risk corridor funding as well as the financial losses they incurred on the marketplaces. Several of the non-profit cooperative health plans established under the law -- all but seven of which have now collapsed -- cited the risk corridor shortfall as a major reason for their financial troubles. Several have sued the Department of Health and Human Services (HHS) over the missing payments.

CMS has said that it will continue to use new funds collected under the program to pay off the 2014 shortfall before it pays the 2015 payments, and to pay off any of those shortfalls before it funds the 2016 payments. The program is set to expire after 2016.

"In the event of a shortfall for the 2016 benefit year, HHS will explore other sources of funding for risk corridors payments, subject to the availability of appropriations," the agency wrote in the memo.

CMS also offered to discuss settlements for outstanding lawsuits in its Friday memo.

"As in any lawsuit, the Department of Justice is vigorously defending those claims on behalf of the United States," the agency wrote. "However, as in all cases where there is litigation risk, we are open to discussing resolution of those claims. We are willing to begin such discussions at any time."

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