There will be lawyers (CSR Edition)

Health Affair’s new ACA blogger, Katie Keith, writes about the first of many lawsuits concerning Cost Sharing Reduction (CSR) subsidies:

On December 28, 2017, Maine Community Health Options (MCHO)—a nonprofit insurer in Maine—filed what is believed to be the first lawsuitagainst the U.S. Department of Health and Human Services (HHS) for failing to reimburse marketplace insurers for cost-sharing reductions (CSRs) for 2017. MCHO seeks an estimated $5.6 million in CSR payments for the 2017 plan year….

MCHO’s claims are relatively straightforward. In brief, MCHO alleges as follows. As an insurer participating in the marketplace, it is required to offer CSR plans and is guaranteed to be reimbursed by the government for doing so under Section 1402 of the ACA and its implementing regulations at 45 C.F.R. 156.430. By failing to make CSR payments, the government deprives insurers of funds that they are statutorily entitled to for participating in the marketplace in 2017. The lack of congressional appropriation is irrelevant because the government has a statutory obligation to make CSR payments and insurers have the right to receive them.

The language in the law is that the insurers “SHALL” offer CSR and the government “SHALL” pay insurers for this added benefit on a regular and timely basis.  I am not a lawyer but I know “SHALL” is a very powerful word denoting strong obligations.

There are two sets of CSR lawsuits that are possible.  The Maine Co-op is filing the first type that should be the most straightforward.  They are asking only for CSR payments for the last three months of 2017 as they were able to mitigate their damages in 2018 by raising their Silver rates.  This one is fairly straightforward.

The more complex potential CSR lawsuit starts with the 2017 lawsuit and then adds in an ongoing recoupment of costs after net mitigation through Silver Loading.  That lawsuit would be complex and a guarantee only of billable hours.