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SCOTUS rejects UnitedHealth appeal of Medicare Advantage overpayment rule

SCOTUS rejects UnitedHealth appeal of Medicare Advantage overpayment rule

Dive Brief:

  • The U.S. Supreme Court on Tuesday declined to hear UnitedHealthcare’s challenge to a federal rule requiring private insurers that administer Medicare Advantage plans to refund payments based on unsupported diagnoses in beneficiaries’ medical records. The 2014 rule calls for the overpayment to be returned to the CMS no later than 60 days after it is identified.
  • Without comment, the justices denied UnitedHealth’s petition to review a 2021 federal appeals court decision that restored the Medicare overpayment rule after a lower court sided with the country’s biggest private payer.
  • UnitedHealth said it would continue to comply with the CMS rules and remain focused on providing affordable, quality healthcare to millions of seniors. “We are proud of the efforts we continue to make to bring greater clarity to the rules governing the growing and successful Medicare Advantage program,” the company said in an emailed statement.

Dive Insight:

The highly popular Medicare Advantage plans have faced increased scrutiny from the government as well as critics who argue that health plans encourage physicians to code more diagnoses, resulting in escalating overpayments. 

The HHS Office of Inspector General in September raised concerns about risk-adjusted payments in the MA program that can make beneficiaries appear sicker and increase inappropriate charges. A 2020 OIG report found that the Medicare Advantage program paid $2.6 billion a year for diagnoses unrelated to any clinical services.

A Kaiser Family Foundation analysis last year determined that Medicare Advantage members cost the government $321 more per person than those enrolled in traditional Medicare, adding $7 billion in spending.

Now covering more than 29 million Americans, or 45% of the total Medicare population, MA plans have doubled their enrollment since 2011 and continue to attract beneficiaries, who say they find the plans have affordable premiums and prescription drug costs and allow them to see their preferred doctors.

UnitedHealthcare filed a legal challenge to the CMS overpayment rule in 2016. In its lawsuit, UnitedHealth argued that the rule was subject to “actuarial equivalence,” a Medicare statute that requires the CMS to adjust payments to MA plans based on risk factors, so that they are equivalent for their members and the traditional Medicare beneficiaries whose healthcare cost data the CMS uses to calculate the capitated MA payments. A district court granted UnitedHealth’s motion and vacated the rule.

But the U.S. Court of Appeals for the District of Columbia found that the actuarial equivalence requirement did not apply to the overpayment rule, and UnitedHealth’s argument was without legal basis. The court remanded the case back to the district court to judge in favor of the CMS.

UnitedHealthcare is the largest Medicare Advantage insurer by enrollment, with about a 27% share of the market in 2021, according to KFF. The insurer projected at the start of 2022 that it would add another 600,000 to 650,000 MA members this year.