Source: https://case-law.vlex.com/vid/892-f-3d-1311-743210213
Timestamp: 2020-05-27 09:23:54
Document Index: 174522916

Matched Legal Cases: ['§ 18001', '§ 18031', '§ 18021', '§ 18061', '§ 1395', '§ 1563']

892 F.3d 1311 (Fed. Cir. 2018), 2017-1994, Moda Health Plan, Inc. v. United States - Federal Cases - Case Law - VLEX 743210213
Docket Nº: 2017-1994
Citation: 892 F.3d 1311
Party Name: MODA HEALTH PLAN, INC., Plaintiff-Appellee v. UNITED STATES, Defendant-Appellant
Attorney: Steven Rosenbaum, Covington & Burling LLP, Washington, DC, argued for plaintiff-appellee. Also represented by Shruti Chaganti Barker, Caroline Brown, Philip Peisch. Alisa Beth Klein, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appella...
Judge Panel: Before Prost, Chief Judge, Newman and Moore, Circuit Judges. Newman, Circuit Judge, dissenting.
892 F.3d 1311 (Fed. Cir. 2018)
No. 2017-1994
Appeal from the United States Court of Federal Claims in No. 1:16-cv-00649-TCW, Judge Thomas C. Wheeler.
This case concerns a three-year "risk corridors" program described in the Patient Protection and Affordable Care Act,
Pub. L. No. 111-148, 124 Stat. 119 (2010) (codified at 42 U.S.C. § § 18001 et seq.) ("ACA"), and implemented by regulations promulgated by the U.S. Department of Health and Human Services ("HHS"). The case also concerns the bills that appropriated funds to HHS and the Centers for Medicare & Medicaid Services ("CMS") within HHS for the fiscal years during which the program in question operated. We begin with the ACA.
Among other reforms, the ACA established "health benefit exchanges"— virtual marketplaces in each state wherein individuals and small groups could purchase health coverage. 42 U.S.C. § 18031(b)(1). The new exchanges offered centralized opportunities for insurers to compete for new customers. The ACA required that all plans offered in the exchanges satisfy certain criteria, including providing certain "essential" benefits. See 42 U.S.C. § § 18021, 18031(c).
Because insurers lacked reliable data to estimate the cost of providing care for the expanded pool of individuals seeking coverage via the new exchanges, insurers faced significant risk if they elected to offer plans in these exchanges. The ACA established three programs designed to mitigate that risk and discourage insurers from setting higher premiums to offset that risk: reinsurance, risk adjustment, and risk corridors. 42 U.S.C. § § 18061-63. This case concerns the risk corridors program.
Section 1342 of the ACA directed the Secretary of HHS to establish a risk corridors program for calendar years 2014-2016. The full text of Section 1342 is reproduced below: (a) In general
The Secretary shall establish and administer a program of risk corridors for calendar years 2014, 2015, and 2016 under which a qualified health plan offered in the individual or small group market shall participate in a payment adjustment system based on the ratio of the allowable costs of the plan to the plans aggregate premiums. Such program shall be based on the program for regional
Page 1315 participating provider organizations under part D of title XVIII of the Social Security Act [42 U.S.C. § § 1395w-101 et seq.].
(A) a participating plans allowable costs for any plan year are more than 103 percent but not more than 108 percent of the target amount, the Secretary shall pay to the plan an amount equal to 50 percent of the target amount in excess of 103 percent of the target amount; and
(B) a participating plans allowable costs for any plan year are more than 108 percent of the target amount, the Secretary shall pay to the plan an amount equal to the sum of 2.5 percent of the target amount plus 80 percent of allowable costs in excess of 108 percent of the target amount.
(A) a participating plans allowable costs for any plan year are less than 97 percent but not less than 92 percent of the target amount, the plan shall pay to the Secretary an amount equal to 50 percent of the excess of 97 percent of the target amount over the allowable costs; and
(B) a participating plans allowable costs for any plan year are less than 92 percent of the target amount, the plan shall pay to the Secretary an amount equal to the sum of 2.5 percent of the target amount plus 80 percent of the excess of 92 percent of the target amount over the allowable costs.
In this section: (1) Allowable costs
Briefly, section 1342 directed the Secretary of HHS to establish a program whereby participating plans whose costs of providing coverage exceeded the premiums received (as determined by a statutory formula) would be paid a share of their excess costs by the Secretary— "payments out." Conversely, participating plans whose premiums exceeded their costs (according to the same formula) would pay a share of their profits to the Secretary— "payments in." The risk corridors program "permit[ted] issuers to lower [premiums] by not adding a risk premium to account for perceived uncertainties in the 2014 through 2016 markets." HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed.Reg. 15,410, 15,413 (Mar. 11, 2013).
On March 20, 2010, just three days before Congress passed the ACA, the Congressional Budget Office ("CBO") published an estimate of the ACAs cost. See Letter from Douglas Elmendorf, Director, CBO, to Nancy Pelosi, Speaker, House of Representatives tbl. 2 (Mar. 20, 2010) ("CBO Cost Estimate"), https://www.cbo.gov/ sites/default/files/111th-congress-2009-2010/costestimate/ amendreconprop.pdf. The CBO Cost Estimate made no mention of the risk corridors program, though it scored the reinsurance and risk adjustment programs. Id. Overall, CBO predicted the ACA would reduce the federal deficit by $143 billion over the 2010-2019 period it evaluated. Id. at p.2.
Preambulatory language in the ACA referred to CBOs overall scoring, noting that the "Act will reduce the Federal deficit between 2010 and 2019." ACA § 1563(a).
In March 2012, HHS promulgated regulations establishing the risk corridors program as directed by section 1342. Standards Related to Reinsurance, Risk Corridors and Risk Adjustment, 77 Fed.Reg. 17,220, 17,251-52 (Mar. 23, 2012) (codified at 45 C.F.R. Pt. 153, Subpart F). Those...