David Holmberg.
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PITTSBURGH—Health care insurer Highmark Inc., the insurance arm of Pittsburgh-based nonprofit Highmark Health, sued the U.S. government earlier this week in the U.S. Court of Federal Claims, arguing that it was owed substantial sums for its participation in the ACA’s state and federal exchanges, with the understanding that the federal government would honor statutory, regulatory and contractual obligations under what’s known as the “risk corridor” program.

The ACA established risk corridors and two other risk-mitigation programs to help insurers weather the uncertain environment in the first few years of expanded health coverage.

As a result, Highmark is owed nearly $223 million, less any prorated amounts actually paid by the government. After repeated written assurances that the risk corridors would be funded and timely paid, the Centers for Medicare and Medicaid Services (CMS) has decided to pay only approximately $27.3 million of this total.

A Highmark corporate spokesperson said, “The government must live up to its statutory, regulatory and contractual obligations to health insurers who offered plans on the exchanges during this time period. Highmark has a responsibility to our 5.2 million health plan members to recover the full amount of the promised risk corridors payments which are now past due. We have pursued all avenues to enforce the government’s obligations: meeting with Obama administration officials, CMS leaders and federal legislators. Our prior efforts to receive payment have been unsuccessful.”

Highmark’s chief executive, David Holmberg, had referenced the impact to the company of not receiving millions of dollars of the risk corridor funds when the group reported its year-end results this past April, as VMail reported.

While Highmark Health reported operating revenues of $17.7 billion for fiscal 2015, an increase of 5 percent over 2014 revenues, the company also reported a deficit of revenue over expenses of $85 million, holding results flat with prior year despite losses in the Affordable Care Act (ACA) business. The enterprise’s investment earnings gains were offset by an operating loss of $565 million, attributable primarily to the performance of its ACA exchange products, which sustained a high level of medical costs for the duration of 2015, similar to the experience of many insurance carriers across the nation, the company said.

The lawsuit this week drew attention in national general, health care and insurance media because of Highmark’s size and its involvement as a major player in the ACA health-insurance marketplaces in three states.

Highmark is the parent company of HVHC, which consists of Visionworks, the national optical retailer, and Davis Vision, the managed vision care company.

Highmark’s spokesperson told VMail, “This suit has nothing to do with Highmark’s commercial business members and group customers. However, for the continued stability of our ACA plans, we have a fiduciary responsibility to our 5.2 million health plan members to recover the monies legally owed to us.”