Blue Cross Hammers Feds for $147 Million

     (CN) — Blue Cross Blue Shield of North Carolina filed suit Thursday, saying the government owes it $147 million in risk-management payments under federal health care law.
     Though the Patient Protection and Affordable Care Act prohibits insurers from denying coverage to anyone based on current health status, Congress recognized that insurers had little information with which to set premiums for the newly insured populations.
     To address the undetermined risk insurers would shoulder under the law, the government enacted three premium-stabilization programs to protect health insurers against market uncertainty.
     One of these programs, the temporary risk corridor program, promised annual payments to health insurers based on a prescribed formula for 2014-16.
     If an insurer’s premiums exceed expenses by a certain target amount, the insurer is required to repay the government. But if premiums do not cover expenses, the insurer is entitled to risk corridor payments.
     Filing suit June 2 in the U.S. Court of Federal Claims, Blue Cross Blue Shield of North Carolina says the U.S. government has paid it only a fraction of what it is owed under the risk corridor program. The insurance giant says the government owes it $147 million for 2014 alone.
     So far, the government has paid Blue Cross just $18 million.
     “The government arbitrarily has paid plaintiff only a pro-rata share — less than 12.6 percent — of the total amount due, asserting that full payment to BCBSNC is limited by available appropriations, even though no such limits appear anywhere in the [Affordable Care Act] or its implementing regulations or in BCBSNC’s contracts with the government,” the insurer’s 45-page complaint states.
     Blue Cross says the government’s failure to make full and timely risk corridor payments violates the Fifth Amendment because it constitutes a “taking” without just compensation.
     “The government expressly and deliberately interfered with and has deprived plaintiff of property interests in its reasonable, investment-backed expectations to receive full and timely [calendar year] 2014 risk corridor payments,” the complaint states.
     Blue Cross alleges breach of contract and bad faith, among other claims. It wants the government to honor its repayment obligations for 2015 and 2016 as well.
     The insurer is represented by Lawrence Sher with Reed Smith in Washington, D.C.

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