Highmark sues federal government to recover $223 million it claims it is owed in ACA payments for 2014

Highmark skyscraper, Pittsburgh. Photo by Brent Moore

Highmark is suing the federal government to recover $223 million it claims it is owed under the Affordable Care Act.

The Centers for Medicare and Medicaid Services has paid $27.3 million out of the $223 million Highmark is owed for 2014 under the ACA's risk corridor program, the company said.

The lawsuit was filed in the U.S. Court of Federal Claims.

As part of the ACA, the federal government created the risk corridor program to pay insurers as a way to temporarily stabilize premium rates in the individual markets. This mitigated the pricing risk faced by insurers which chose to cover new ACA beneficiaries without having past information on the medical costs incurred by the new  enrollees.

The law stipulated payments were to be made each year from 2014 to 2016, according to Highmark.

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Despite repeated promises, the federal government failed to honor its statutory and contractual obligations as well as public statements that induced insurers to participate in the ACA marketplace, Highmark said.

"Highmark entered the ACA markets in good faith -- as encouraged by the federal government -- with the assurance that the government would fulfill its legal commitments," said Highmark Health President and Chief Executive Officer David Holmberg. "Given the federal government's failure to honor its obligations, even after repeated assurances that it would do so, we have no choice but to file litigation. We have a fiduciary responsibility to our 5.2 million health plan members to seek payment."

Under Medicare Part D, risk corridors successfully protected consumers from market volatility and helped keep coverage affordable, said Thomas VanKirk, ‎Highmark Health's chief legal officer.

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"Under Medicare Part D, enacted under President George W. Bush, the government fulfilled its legal obligation to share unintended risk with insurance companies," VanKirk said. "This time, however, the government has failed to honor its obligations and Highmark has no choice but to file litigation to enforce the government's obligations to recover the full risk corridor payments owed."

Highmark intends to stay in the individual insurance marketplace, it said. It operates health insurance plans in Pennsylvania, Delaware and West Virginia.

Highmark and its health insurance subsidiaries are among the ten largest health insurers in the country, and comprise the fourth-largest Blue Cross and Blue Shield-affiliated organization, the company said.

Twitter: @SusanJMorse