ALBUQUERQUE, N.M. — Editor’s note: An earlier version of this story incorrectly reported that officials from the Centers for Medicare and Medicaid Services and the U.S. Department of Health and Human Services are plaintiffs in the suit. Instead, they are defendants.
New Mexico Health Connections sued the federal government Monday over a program that will force it to make a $14.6 million payment to larger insurance companies, which it says will drive up rates for next year.
The lawsuit marks a big step for CEO Dr. Martin Hickey, a longtime advocate of the Affordable Care Act, President Barack Obama’s insurance reform designed to extend health coverage to more Americans.
The federal law requires insurers with healthier members to make “risk adjustment” payments to those with sicker members who cost more to cover.
Also suing over the risk payment program are co-op plans Minuteman Health of Massachusetts and Evergreen Health Cooperative of Maryland.
In the federal lawsuit filed in Albuquerque, the nonprofit Health Connections said it made $6.7 million in risk adjustment payments for 2014 — equivalent to more than 20 percent of total premiums. For 2015, it owes $14.6 million, nearly 15 percent of premiums. By contrast, the state’s largest insurer, Blue Cross Blue Shield of New Mexico, will receive more than $25 million in risk adjustment payments for those two years, the complaint reads.
Blue Cross pulled out of the Affordable Health Care exchange for 2016 coverage, but it plans to re-enter the market for next year.
“Rather than stabilize the marketplace, they (federal regulators) have destabilized it,” reads the complaint from New Mexico Health Connections. “Rather than create competition, they are crushing, the small, innovative new entrants.”
Defendants in the 46-page complaint are officials from the Centers for Medicare and Medicaid Services and the U.S. Department of Health and Human Services.
Hickey, who has had several unsuccessful meetings with CMS to resolve the issue, said the co-op is asking the court to declare that the risk adjustment methodology needs to be revised and to keep the government from collecting further payments until a ruling in the case is made. It also wants to be paid costs and attorney fees.
Hickey also is the head of a national association of co-op plans.
Officials from CMS were not immediately available for comment.