DOJ denied a dismissal of Humana's lawsuit over MA audits
The court ruled Humana's compliance costs constitute substantial hardship and denied the DOJ's motion to dismiss for lack of standing.
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A federal judge for the Northern District of Texas in Fort Worth has ruled against the Department of Justice's motion to dismiss a case brought by Humana.
Judge Reed O'Connor also denied the DOJ's motion to transfer the court venue to Dallas.
This means that Humana's case over Medicare Advantage audits can move forward. O'Connor ordered both parties to submit a joint schedule for summary judgment briefings by June 20.
WHY THIS MATTERS
Humana brought the lawsuit on September 1, 2023, based on a final rule issued by the Centers for Medicare and Medicaid Services that changes previous audit procedures.
The final rule issued on February 1, 2023, allows CMS to recover funds from MA plans by statistically extrapolating audit results across the contract's entire enrollee population to recover contract-wide repayments.
Historically, CMS recouped only payments corresponding to individual diagnosis codes from the enrollee sample.
Humana argues that the final rule results in financial loss and new compliance costs for actuarial work.
On Friday, the court ruled Humana's compliance costs constitute substantial hardship and denied the DOJ's motion to dismiss for lack of standing.
THE LARGER TREND
For Medicare Advantage plans, CMS agrees to pay insurers the same amount they would expect to pay in the fee-for-service Medicare program.
In original Medicare, CMS pays providers directly. But in Medicare Advantage, CMS pays the MA Organization a prospective amount calculated using a base rate that's set through an annual bidding process by insurers, and by considering risk factors.
To ensure accuracy of diagnosis codes used for risk, the Department of Health and Human Services implemented Risk Adjustment Data Validation (RADV) in the final rule. Under RADV, CMS and the Inspector General for HHS audit a subset of MA contracts and require the contract administrator to submit medical records for a sample of enrollees. CMS or the HHS-OIG then review.
RADV eliminates the former Fee-For-Service Adjuster Rule.
Email the writer: SMorse@himss.org
