UnitedHealth Group Overpayment Ruling Could Impact Providers

From RADAR on Medicare Advantage

A federal judge's recent ruling in a UnitedHealth Group lawsuit, which challenged a CMS 2014 final rule requiring the reporting and returning of Medicare Advantage overpayments, reads as a major victory for MA insurers.

UnitedHealth, the largest sponsor of MA products in the U.S., its UnitedHealthcare subsidiaries and other MA insurers in January 2016 filed a complaint against the federal government. It alleged that CMS in finalizing its 2014 Overpayment Rule violated the statutory mandate of "actuarial equivalence" by asking sponsors to return overpayments based on audited records, while the methods used to determine MA payment rates are based on unaudited records of fee-for-service (FFS) Medicare transactions.

In U.S. District Court Judge Rosemary Collyer's opinion on UnitedHealthcare Insurance Co. et al. v. Azar (16-157), the 2014 Overpayment Rule "fails to recognize a crucial data mismatch" and "establishes a system where 'actuarial equivalence' cannot be achieved." She ruled that CMS was "arbitrary and capricious" in adopting that rule without explaining its departure from prior policy, granted summary judgment to UnitedHealthcare and vacated the 2014 Overpayment Rule.

"It appears to be a major victory for the Medicare Advantage plans," observes Bob Ramsey, a shareholder in Buchanan Ingersoll & Rooney's health care section. "And the implications of this particular decision go beyond just UnitedHealthcare. The judge's decision rejected the government's view of what constitutes an overpayment in the MA world, and it could have implications on the provider side, because CMS in its companion rulemaking process" imposed a similar overpayment rule on Medicare Part A and Part B providers and suppliers, he points out.

Additionally, the ruling "dealt a blow to the government's overall theory" as it pursues lawsuits and investigations into the chart review practices of other MA plans, and some of the arguments validated by the District Court could apply in those cases, suggests Ramsey.

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