Another day, another defeat.

Or so it must seem to the Trump administration, with the news that Montana Health Co-op has emerged victorious—the first insurer to do so—in its case against the federal government over $5.3 million in unpaid cost-sharing reduction payments. Other insurers have also filed suit, but the Montana case is the first victory.

Modern Healthcare reports that the U.S. Court of Federal Claims ruled in favor of Montana Health in finding that the government violated its obligation under the Affordable Care Act when it stopped paying the CSRs in October 2017.

“This decision is an important win for Montana Health and the healthcare industry, generally, which has a significant stake in the CSR cases,” Stephen McBrady, a partner at law firm Crowell & Moring, which represented Montana Health in the lawsuit, is quoted saying in the report.

At issue: whether the government was legally obligated to pay CSRs to Montana Health for reimbursement for lowering the out-of-pocket health care costs for policyholders with incomes up to 250 percent of the federal poverty level.

The government claimed no obligation to make such payments, since Congress never appropriated funds to do so. CSRs have been paid to insurers since 2014 by the Centers for Medicare and Medicaid Services, up till the Trump administration decided to stop doing so in the fourth quarter of 2017.

Insurers were still on the hook to lower those out-of-pocket costs, however, whether they were reimbursed or not, so in 2018 they raised premiums to make up for the missing money. At the time, the report says, the National Association of Insurance Commissioners said ending the CSRs would cost insurers $1 billion in 2017 alone.

Health insurers, including Montana Health, said the government had to pay CSRs regardless of appropriation, since Section 1402 of the ACA said it must. And, Judge Elaine Kaplan of the U.S. Court of Federal Claims agreed.

“The statutory language clearly and unambiguously imposes an obligation on the Secretary of HHS to make payments to health insurers that have implemented cost-sharing reductions on their covered plans as required by the ACA,” Kaplan said in a statement.

It's the statute that determines the government's obligation, not the presence or absence of appropriated funds, according to a partial Federal Circuit court ruling in another lawsuit.

Although the government is likely to appeal the ruling, the decision must bring hope to other filers—including Maine Community Health Options, Sanford Health Plan and Health Alliance. In addition, reports Modern Healthcare, “Judge Margaret Sweeney of the U.S. Court of Federal Claims in April granted Wisconsin-based Common Ground Healthcare Cooperative's request for class-action status, allowing health insurers to sue together as a class to challenge the federal government's failure to pay CSRs.”

Instant Insights /

Montana insurer scores win in lawsuit over unpaid CSRs

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