×

Health insurer Highmark sues US over Obamacare payments

A big player in Obamacare insurance markets is tired of waiting for a big pot of money it says the federal government owes, and now it's taking its case to court.

Highmark is suing the government demanding payment of almost $223 million, the full amount to which the health insurer says it is legally entitled for 2014 under an Obamacare program designed to limit the business risk of selling plans.

Highmark's suit, filed in the U.S. Court of Federal Claims in Washington, effectively rejects the government's position, announced last year, that it would pay Obamacare insurers only 12.6 percent of what they were claiming under the health-care law's "risk-corridor" program.

Because of that policy, all eligible Obamacare insurers are being paid just $362 million out of the $2.87 billion they had claimed for 2014. Highmark itself has gotten about $27 million.

The Highmark Building in downtown Pittsburgh, Pennsylvania.
Brent Moore | Flickr CC
The Highmark Building in downtown Pittsburgh, Pennsylvania.

The suit by Highmark, the insurance unit of Highmark Health, was reported Tuesday night by The Wall Street Journal.

The risk-corridor program is one of several Obamacare programs that are designed to cushion financial losses that insurers suffer from plans they sell on Obamacare marketplaces operated by federal and state governments.

Under that program, which ends in 2017, insurers that had financial gains from their Obamacare business would contribute money to the risk-corridor pool, which would then be tapped to subsidize insurers that had losses.

In its suit, Highmark claims federal officials at first said that risk-corridor payments due to insurers would be made in full, even if there was not enough money collected from profitable insurers, the Journal reported.

But officials later said the risk-corridor program would be budget-neutral, meaning that only money collected from other insurers would be used to make the payments. The Republican-controlled Congress, which is staunchly opposed to Obamacare, later made that policy law.

"All we're asking is for the federal government to do what they promised," Highmark Health Chief Executive David Holmberg told the Journal.

A spokesman for the U.S. Health and Human Services Department did not immediately respond to a request for comment from CNBC.

Read the full Wall Street Journal story here.