A recent U.S. Court of Federal Claims decision spells good news and bad news for a Qualified Health Plan (QHP).

First, the good news: the Court has jurisdiction of a claim for the Department of Health and Human Services’ failure under the Affordable Care Act’s (ACA’s) Risk Corridors Program to pay the amount required by the statute and regulations. The bad news is that the QHP must wait until completion of HHS’s audit and other procedures before it can sue. Whether the Court’s interpretation is right or wrong, it is difficult to understand how this Risk Corridor Program will provide temporary relief to a QHP if it must wait three years before receiving payment.

The April 18, 2017 decision held that the Court has jurisdiction over a suit by a QHP seeking a monetary judgment against the HHS for alleged failure to properly pay the QHP amounts due under the ACA’s Risk Corridors Program under ACA Section 1342, 42 U.S.C. § 18062. Blue Cross and Blue Shield of North Carolina v. United States, US COFC, No. 16-651C, (April 18, 2017, Griggsby, J.) The Court held that it had jurisdiction over the QHP’s claims based on violation of a “money-mandating” statute and implementing regulations, but dismissed the claim because payment was not yet due.

This article focuses on the Court’s decision that ACA Section 1342’s provisions that HHS “shall pay” prescribed percentage amounts to a QHP makes that provision a “money-mandating” statute and that the Court has jurisdiction over a QHP’s money claim based on alleged violation of that statute.

Blue Cross and Blue Shield of North Carolina (BCBS NC) is a QHP that provided health insurance coverage under the Affordable Care Act (ACA). BCBS NC brought a suit for damages in the U.S. Court of Federal Claims alleging that HHS failed to properly pay BCBS NC amounts required by the ACA’s Risk Corridors Program under ACA Section 1342, 42 U.S.C. § 18062.

The Court’s decision includes an excellent summary of the ACA’s objectives and its provisions to protect a QHP from unanticipated financial risk in insuring previously-uninsured individuals whose medical conditions are unknown. The Court explains that the Risk Corridor Program, applicable in 2014 – 2016, was one of several means employed under the ACA to mitigate a QHP’s financial risk from insuring such previously-uninsured individuals.

ACA Section 1342 states that the Risk Corridor Program is “a payment adjustment system based on the ratio of the allowable costs of the plan to the plan’s aggregate premiums.” Under the statute and its implementing regulations, 45 C.F.R. § 153.510(a)-(b), HHS “shall pay” prescribed amounts to a QHP in the event that the Plan’s allowable costs exceed its target amount anticipated when premiums were established.

The Court explained that the Court has jurisdiction of a claim for money damages based on a “money-mandating source of law.” “A source is money-mandating when it “can fairly be interpreted as mandating compensation by the [government].” The Court held that ACA section 1342 and its implementing regulations were “money-mandating,” because they provide that HHS “shall pay” prescribed amounts to the QHP, and that the word “shall” typically states a mandatory requirement. Thus, the Court of Federal Claims had jurisdiction over BCBS NC’s claim that HHS violated the statute.

But the Court then dismissed the claim for failure to state a claim upon which relief could be granted. BCBS NC contended that the statute and regulations impliedly required HHS to pay the proper amount to a QHP within one year (in this case, by December 31, 2015). But the Government argued that HHS’s policy is to interpret the statute and regulation such that it does not state a time period for payment. The Court stated, “The [HHS’s] policy a ords HHS the full three years of this temporary program to make up any shortfall in the Risk Corridors Program Payments as funds become available. Given the absence of a statutory deadline for making the Risk Corridors Program Payments to issuers—and the temporary nature of the Risk Corridors Program— HHS’s policy is sound and consistent with Section 1342.” Since payment was not yet due BCBS NC, the Court dismissed the claim for failure to state a claim upon which relief could be granted.