Supreme Court declines to hear cost sharing reduction case

Photo: Mike Kline/Getty Images

The Supreme Court will not hear a case regarding unpaid cost-sharing reduction payments to insurers.

The Supreme Court denied the petition by Maine Community Health Options and Community Health Choice on June 21. This means that lower appeals court decisions stand and insurers will get less reimbursement than what they sought.

The appeals court ruled the government should pay the promised CSRs, but it also indicated the government doesn't owe the money because insurers are otherwise funded through a practice of raising premiums on silver level plans, known as "silver loading." Most consumers don't pay more, because premium tax credits are based on silver-tier premiums. The government ends up subsidizing the silver loading of premiums.

Insurers looked for the Supreme Court to rule they are owed the full CSR payments.

In a brief filed on June 1, the health plans said the federal government had failed to honor its payment obligations under the Affordable Care Act.

The ACA requires insurers to provide cost-sharing reductions to consumers with incomes below 250% of the federal poverty level who enroll in silver-tier marketplace plans. But while the federal government no longer provides reimbursement, insurers must still provide CSRs to eligible consumers who enroll. 

"The stakes here run to the billions and extend well beyond this case," the plans said in asking the Supreme Court to grant review.

WHY THIS MATTERS

At stake is hundreds of millions, if not billions, of federal dollars that are owed to insurers, according to Margaret A. Murray, CEO of the Association for Community Affiliated Plans, which had filed an amicus brief supporting insurers.

"As stated in the amicus brief we filed in this case, these consequences are especially significant for smaller community plans, like ACAP's members, which are less well-equipped to weather marketplace disruptions or absorb losses than national insurance carriers."

THE LARGER TREND

Maine Community Health Options and Community Health Choice brought the case to the Supreme Court in February, after years of back and forth between insurers and the government. 

The issue was politicized as members of Congress said they had never approved the funds for CSRs that were in former President Barack Obama's signature healthcare law. 

In 2016, Judge Rosemary M. Collyer of the District of Columbia agreed. The litigation was resolved in May 2018, according to Health Affairs, but not before the Trump Administration in October 2017 cited Collyer's ruling to justify a decision to stop making the CSR payments. 

A federal court granted insurers class action status on the payments. In August 2020, the U.S. Court of Appeals for the Federal Circuit affirmed a 2019 court order requiring the federal government to reimburse insurers for cost-sharing reduction payments, but limited the amount to be paid.
 
ON THE RECORD

Murray said, "ACAP is disappointed by the Court's decision to leave in place the Federal Circuit's ruling in this case, a ruling we maintain ignores the ramifications of the government's refusal to meet its obligations written in statute -- not just for the health insurance marketplace but for anyone doing business with the federal government."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com