Health Reform WK-EDGE Cost-sharing reduction payments required, despite Congress’s refusal to appropriate funds
Friday, October 19, 2018

Cost-sharing reduction payments required, despite Congress’s refusal to appropriate funds

By Tana McPherson

The United States’ obligation to make cost-sharing payments to insurers who sell qualified health plans under the Patient Protection and Affordable Care Act (ACA) (P.L.111-148) is not negated by Congress’s failure to make the corresponding funding appropriations for fee payments. The Federal Claims court granted Sanford Health Plan’s (Sanford) cross-motion for summary judgment against the federal government for unpaid cost-sharing fees, pursuant to section 1402 of the ACA(Sanford Health Plan v. U.S., October 11, 2018, Kaplan, E.).

CSR payments. The cost-sharing reduction provisions of ACA were designed to make premiums more affordable for eligible enrollees. The ACA did this by compensating participating insurers who were statutorily mandated to absorb out-of-pocket costs for enrollees’ deductibles, copayments, and similar charge. However, on October 12, 2017, HHS issued a directive to CMS to stop paying reimbursements because Congress did not fund the offsets for the program. As a result, several insurers, including Sanford, filed lawsuits with the Court of Claims to recover the funds.

In the present case, the court rejected the government’s summary judgment arguments that compensation is contingent on appropriations, and instead looked to the plain language of Section 1402, which provides that the government "shall pay" an insurer for their portion of unpaid premiums. Relying on a separate Federal Circuit decision, which held that "it has long been the law that the government may incur a debt independent of an appropriation to satisfy that debt, at least in certain circumstances," the court held the "shall pay" language creates an obligation and right independent of Congressional funding appropriations. Sanford was awarded $360,254 and costs.

The case is No. 18-136C.

Attorneys: Stephen John McBrady (Crowell & Moring LLP) for Sanford Health Plan. Christopher James Carney, United States Department of Justice, for United States.

Companies: Sanford Health Plan

Cases: CaseDecisions AgencyNews CostSharingNews CtFedClaimsNews NewsFeed

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