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UnitedHealthcare Takes Aim At Medicare Advantage Overpayment Rule

Forty-one companies under the UnitedHealth Group umbrella, led by UnitedHealthcare Insurance Co., have set their sights on blocking Medicare Advantage regulations governing the returning and reporting of overpayments by filing suit against the Secretary of Health and Human Services in a federal district court in Washington.  

The suit, filed last week claims that the rule on overpayments promulgated by the Centers for Medicare and Medicaid Services in 2014 doesn’t follow the text of the Medicare Act, which requires that CMS assess the health status traditional fee-for-service Medicare participants and Medicare Advantage participants similarly.  

In response to a provision of the Affordable Care Act which require companies that received overpayments from government programs to report and repay those amounts within 60 days of identifying the overpayments, the CMS issued a final rule effective July 2014 that allegedly requires all insurers offering Medicare Advantage plans to withdraw previously submitted diagnostic codes that can’t be supported by specific documentation in the underlying medical charts.

According to the UnitedHealth entities, this rule will result in vast underpayment for Medicare Advantage plans because their monthly capitation payments are based on the diagnostic codes provided to them in claim forms. The complaint alleges that, if the plans are then required to go back and withdraw and repay CMS for any diagnostic code that isn’t fully supported, it could result in as much as a 20 percent reduction in the payments to the plans.  

The insurers claim that this violates the “actuarial equivalence” required by the Medicare Act because it allows traditional fee-for-service Medicare participants to have all their reported health claims paid without requiring a comparison to the underlying medical records while forcing Medicare Advantage plans to do a searching audit and return a significant portion of their payments or be potentially subject to False Claims Act liability.  

The case was filed Jan. 29 in the U.S. District Court for the District of Columbia and is UnitedHealthcare Ins. Co. v. Burwell, D.D.C., No. 1:16-cv-157.

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