DOJ wants Humana case thrown out but first transferred to another court

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The Department of Justice wants Humana's complaint against the Department of Health and Human Services thrown out, but it wants the decision made in a court other than the one where the case was filed.

Humana sued HHS over a final rule issued earlier this year regarding federal audits to recoup overpayments in Medicare Advantage. It brought the complaint in federal court in the Northern District of Texas, Fort Worth Division.

The DOJ said earlier this month that Humana and its Texas subsidiary, Humana Benefit Plan of Texas, cannot establish standing to press their challenge because CMS has asked for no audits in Fort Worth, and neither Humana nor its subsidiary is based there. CMS has not begun – much less completed – any audits under the challenged rule, it said.

"Nor are certain aspects of that challenge currently ripe for adjudication," the DOJ said. "For those reasons, the complaint should ultimately be dismissed. But rather than dismissing the case now, the court should transfer it to the Dallas Division."

Humana has its principal place of business in Louisville, Kentucky. Its Texas subsidiary is based in Dallas, the DOJ continued. 

"Yet plaintiffs have filed in the Fort Worth Division, where no party resides and nothing giving rise to their claims occurred," the DOJ said. "The case should be transferred, so that the arguments for dismissal can be heard in the proper division."

Humana opposes the transfer to the Dallas division, the DOJ said.

"Defendants' counsel conferred with plaintiffs' counsel by electronic mail and telephone from December 13 through 15, 2023," the court record said. "Plaintiffs' counsel authorized defendants' counsel to represent that plaintiffs oppose transfer of venue to the Dallas Division."

Fort Worth District Judge Reed O'Connor ruled against the Affordable Care Act in 2018, and in 2022 struck down the preventive care requirement of the law, though the case is still being appealed, according to Becker's.

WHY THIS MATTERS

The Centers for Medicare and Medicaid Services issued the final rule on January 30. AHIP said at the time that it was "unlawful" and "fatally flawed."

Humana sued on September 1, asking the court to vacate the final rule and enjoin the agency from applying the new policy in any audit of the plaintiffs. 

"This lawsuit challenges the federal government's arbitrary and capricious reversal of a policy governing payment audits conducted by the Medicare Advantage program," Humana said in the complaint. "At stake is the financial stability of this enormously popular government health insurance program, which provides life-saving healthcare coverage for more than 30 million seniors."

Humana contends that the rule is substantively invalid, because:

• It disclaims the use of a particular adjustment factor in calculating those future audit recoveries.
• It is impermissibly retroactive, because it applies that policy to previous payment years.
• It is procedurally invalid, because it discusses a decision by a federal court of appeals on which public comment was not sought, according to court records. 

The DOJ said that for more than a decade CMS has considered the use of statistical sampling and extrapolation in Medicare Advantage audits, to allow the government to recoup a larger portion of its overpayments.

Under the rule, the agency may use statistical sampling and extrapolation in future Medicare Advantage audits, beginning with payment year 2018. 

THE LARGER TREND

HHS pays MA insurers per member, per month, based on the severity of illness. Insurers are paid more for covering beneficiaries with certain medical conditions. The federal government then conducts audits to confirm the accuracy of some reported diagnoses. 

Any payments based on diagnoses that are not documented in the beneficiary's medical record are then recouped. Historically, the recoveries made through this audit program have been a fraction of the estimated overpayments to Medicare Advantage insurers, the DOJ said in court records.

Federal audits released last year show widespread overcharges and other errors in payments to Medicare Advantage health plans for seniors, with some plans overbilling the government more than $1,000 per patient a year on average, according to Kaiser Health News.

Other reports have shown that Medicare Advantage costs the federal government more than original Medicare.

Recent analysis published in the New England Journal of Medicine show that more than half of Medicare's 66 million beneficiaries are opting for private Medicare Advantage plans, a development likely to put further strain on an already overstretched healthcare system.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org