On December 10, 2019, the Supreme Court heard oral arguments concerning $12 billion that insurers say they are owed by the federal government as part of the risk corridor program.
The risk corridor program was one of the ACA’s three premiums stabilization programs (along with risk adjustment and reinsurance). The temporary risk corridors program was designed to run from 2014 to 2016 and meant to encourage risk-averse insurers to participate in the ACA marketplaces.
Here’s how the program was set up: If a plan’s costs were lower than it’s premiums, the plan would pay a share of it’s profits to the Department of Health and Human Services (HHS). If the plan’s costs exceeded premiums received, the plan would receive a payment from HHS for it’s excess costs. Insurers entered the marketplace under the assumption these risk corridor payments would be made to cushion extreme gains and losses.
Hurricane Florence is poised to make landfall on the Carolina coast tonight, marking the first landfall on the U.S. mainland this hurricane season. Secretary of HHS Alex Azar declared a public health emergency for North Carolina and South Carolina to provide Medicare and Medicaid beneficiaries and health care providers greater flexibility in meeting emergency health needs, as well as readying personnel from the National Disaster Medical System. As we all watch Florence and her impact on millions of Americans, we thought it would be a good to take a quick look at the inexorable connection between emergency preparedness, weather, and medical care. [No discussion of hurricanes and health would be complete without addressing Hurricane Maria and the devastation it wrought on Puerto Rico, but that is a longer post for another day.]
On June 29, 2018, the D.C. federal district court issued a ruling in Stewart v. Azar, a lawsuit brought by a group of Kentucky Medicaid beneficiaries challenging the Secretary of HHS’s approval of a Section 1115 Medicaid waiver that imposes work requirements, monthly premiums up to 4% of income, coverage lockouts, and other provisions on Kentucky’s Medicaid program that could lead to a loss of coverage for 95,000 enrollees. The judge ruled that HHS Secretary Azar violated the Administrative Procedures Act (APA) in approving the waiver by not adequately evaluating whether the requirement that beneficiaries log 80 hours a month of “work and community engagement” furthers the objectives of Medicaid.
In early 2017, CMS Administrator Seema Verma and former HHS Secretary Tom Price sent a letter to governors promoting more flexibility in the design of state Medicaid programs with 1115 waivers to refocus the program on the “truly vulnerable.” Republicans argue that social service programs, such as Medicaid, disincentivize work and favor imposing work requirements as a condition of receiving benefits. The Obama Administration did not allow states to pursue work requirements, which are predicted to make it a serious challenge for low-income individuals and families to retain Medicaid coverage.
We’ve already covered how Medicaid benefits are structured–mandatory versusoptional–and the partnership between the federal government and the states in administering the program. But did you know that states can apply to the Secretary of Health and Human Services to waive certain requirements of Medicaid? Medicaid has not always been successful at serving its diverse and medically-complex population, including eliminating barriers to access and quality care and an inadequate focus on long-term health outcomes. Thus, federal law gives the Secretary of HHS the authority to grant Section 1115 waivers, also known as “Demonstration Project” waivers. [“1115” is the section of the Social Security Act that outlines the purpose and scope of these waivers.]