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April 30, 2020

SCOTUS Reverses Federal Circuit on ACA Risk Corridor Payments

On April 27, the Supreme Court issued its opinion in Maine Community Health Options. The lawsuit, where a health plan participant in the ACA was seeking to hold the federal government responsible for the risk corridor payments that were included in the legislation to entice health plans to participate by offering for 3 years to help cover losses related to participation/benefit costs. In so ruling, the Supreme Court reversed the holding of the United States Court of Appeals for the Federal Circuit, which had held that the government was not required to make the payments.

The Supreme Court noted that it was “intended” – or politically promised – that the funds necessary to pay those amounts due the plans entitled to the payments under the methodology used would come from payments made into the program. However, those funds paid in were never sufficient to pay the payments due and Congress never appropriated the funds to cover the shortfall, so the government stopped making any payments under the program and the program was unfunded. A number of health plans and co-ops sued to have the courts force the government to pay, arguing that the promise to pay under the program was a “contract”, that the plans had fulfilled their obligations under the contract by participating in the ACA exchanges, enrolled members and paid benefits, and that the Federal Government had breached its obligations by not paying those amounts owed under the risk corridor program. The Supreme Court, in an 8-1 decision, held that the government is required to make the payments.