May 22, 2018
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Maine Obamacare insurer sues US government for $5.7 million

Gabor Degre | BDN
Gabor Degre | BDN
File photo of the healthcare.gov web portal, where people can sign up for coverage under the Affordable Care Act.
By Lori Valigra
Updated:

A Lewiston-based health insurance cooperative is suing the U.S. government to recoup subsidies it claims it is owed under the Affordable Care Act, also known as Obamacare.

The nonprofit Community Health Options is seeking $5.7 million in cost-sharing reduction payments. Those are discounts the insurer gives to its members that the federal government had been reimbursing monthly since 2014 under an ACA provision.

A Department of Justice ruling last year said there were no funds directed for the payments and discontinued them from October through December 2017.

However, Community Health Options claims that under Section 1402 of the ACA, the federal government did not fulfill its obligations to pay.

“Section 1402 requires health plans to provide cost-sharing reductions to members, and then the health plans to be reimbursed by the U.S. government under the ACA,” said Stephen McBrady, attorney at Crowell and Moring LLP in Washington, D.C., the counsel for Community Health Options.

“The government made monthly payments to the health exchanges since the ACA started in 2014, and it did so in 2015, 2016 and through September of 2017,” he added. “Community Health Options could not change its health plan part way through the year [to make up for the halt in reimbursements], so it was financially harmed. The $5.7 million matters to a nonprofit.”

If Community Health Options wins the case, the money will come from the U.S. Department of the Treasury’s judgment fund.

Community Health Options is the largest provider of individual health insurance plans in Maine and focuses on previously uninsured and underinsured clients, according to the lawsuit.

Last year, about 79,500 Mainers were covered by an ACA plan, according to the Henry J. Kaiser Family Foundation, and most of those qualified for a subsidy.

The lawsuit has yet to receive a hearing date in the U.S. Court of Federal Claims.

McBrady said a separate class action lawsuit filed against the United States by Common Ground Healthcare Cooperative of Wisconsin last June has added a count that includes the lack of cost-sharing reduction payments.

McBrady said Community Health Options decided to file individually instead of joining the class action lawsuit to resolve its lawsuit expediently.

Separately, Community Health Options is appealing a 2016 lawsuit it lost against the government requesting $23 million in back payments under a temporary program designed to help stabilize costs in the ACA health insurance market.

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