BCBSNC Sues Federal Government for Risk Corridor Payments Owed

Durham, N.C. - Blue Cross Blue Shield of North Carolina has joined the growing list of insurers holding the U.S. government accountable for required payments.

• BCBSNC is suing for hundreds of millions of dollars in risk corridor payments the government is required to pay the insurer under the Patient Protection and Affordable Care Act (ACA), as well as assurances from the government that full risk corridor payments for 2015 and 2016 will be timely made.
• Federal government underpaid BCBSNC by approximately $130 million for 2014 alone.
• Risk corridor payments are required by government obligations under statute, regulation and contract in connection with BCBSNC’s agreement to serve as a Qualified Health Plan on ACA Exchanges in North Carolina.

Blue Cross and Blue Shield of North Carolina (BCBSNC) has filed suit against the federal government in the United States Court of Federal Claims, located in Washington, DC, for hundreds of millions of dollars in mandatory risk corridor payments the government owes to the insurer for 2014 under the Patient Protection and Affordable Care Act (ACA).

BCBSNC also seeks assurances from the government that full risk corridor payments for 2015 and 2016 will be timely made. The government is obligated by statute, regulation and contract to timely pay the full risk corridor payments owed to BCBSNC for 2014. The government has acknowledged it is obligated to pay BCBSNC approximately $147 million in mandatory risk corridor payments for 2014, but has only paid BCBSNC approximately $18 million of that amount – a shortfall of nearly 90%.

BCBSNC estimates that the government will owe it more than $175 million in mandatory risk corridor payments for 2015 as well. The federal government’s failure to meet its legal obligations exacerbated BCBSNC’s ACA losses in 2014 and 2015 and has made it significantly more challenging for the company to continue selling ACA products.  BCBSNC lost more than $400 million on its ACA products in 2014 and 2015.

Congress designed the temporary risk corridor program to provide financial stability for insurers and consumers during the first few years of the ACA and to encourage more insurers to participate in the ACA’s new exchanges.  The risk corridors program was modeled after a similar plan Congress initiated when it expanded Medicare to include Part D coverage of prescription drugs during the last decade. 

“We are working hard to make the Affordable Care Act work for our customers and our company,” said BCBSNC President and CEO Brad Wilson.  “The federal government’s failure to honor its legal obligations contributed significantly to our ACA losses in 2014 and 2015 and makes it more challenging for our company to continue selling ACA products to our customers.”

“The risk corridor payments are legally required under the Affordable Care Act, its implementing regulations and pursuant to contracts between BCBSNC and the federal government,” said BCBSNC General Counsel King Prather.  “BCBSNC’s decision to participate in this new, volatile ACA marketplace was impacted by our reliance on the government’s assurances that the risk corridor program was in place to provide some protection against the significant losses we have suffered.  All we’re asking is that the federal government live up to its promises and pay what it is legally and contractually required to pay.”

About Blue Cross and Blue Shield of North Carolina:

Blue Cross and Blue Shield of North Carolina improves the health and well-being of our customers and communities by providing innovative health care products, services and information to more than 3.89 million members, including approximately 1 million served on behalf of other Blue Plans. Since 1933, we have worked to make North Carolina a better place to live through our support of community organizations, programs and events that promote good health. We have been recognized as one of the World’s Most Ethical Companies by Ethisphere Institute every year since 2012. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. Visit Blue Cross online at bcbsnc.com. All other marks are the property of their respective owners.