Moda Health today filed suit against the United States Government in the U.S. Court of Federal Claims seeking payment of $179,985,127 owed to the company under the Patient Protection and Affordable Care Act (ACA) for providing insurance coverage to people in Oregon, Washington and Alaska in 2014 and in 2015. The government’s failure to make timely payments of the amounts owed placed upon Moda Health severe capital constraints that have been alleviated by the infusion of an additional $165 million of private capital.
The Affordable Care Act of 2010 transformed the health insurance market by creating access to healthcare for millions of previously uninsured Americans. Because little was known about the healthcare costs of this new population, the federal government designed a “risk corridors” program to address insurers’ uncertainty in setting premium rates by having the government share some of the risk. Under this program, the government is legally responsible for specific payments to those insurers whose plan costs exceeded target amounts during the first three years (2014-2016) of operation of health exchanges.
Moda, long known as a healthcare innovator, embraced the ACA and became a leading private sector partner implementing the new law. Relying on the statutory requirements in the ACA, including the risk corridors program, the health plan covered approximately 121,000 individuals in Oregon, Alaska and Washington in the exchanges’ first year. The resulting risk corridors payment due Moda from the federal government is $78,142,722 for 2014. The 2015 amount due is an additional $101,842,405.
Last fall, the federal Department of Health and Human Services announced that insurers initially would receive only 12.6% of the risk corridors payment due for 2014. To date, Moda has received only $11,283,708 of money it is owed. Moda now is seeking the full amount still due for 2014 and the additional amount due for 2015.
“Three years ago,” says Robert Gootee, President and CEO of Moda, “our company accepted the challenge to partner with state and federal agencies to transform the way healthcare is provided and paid for. The risk corridors program was designed to encourage insurers to participate in the opening phase of that transformation. And it did exactly that, by providing a benefit to consumers through lower premium costs. It’s time now these payments were made. All we are asking is for the federal government to do what was promised.”
