Supreme Court declines to hear UnitedHealthcare appeal of Medicare overpayment rule

Photo courtesy of UnitedHealthcare

The U.S. Supreme Court has declined to hear UnitedHealthcare's challenge to a federal rule stipulating insurers offering Medicare Advantage plans refund payments based on unsupported diagnoses in patients' medical records.

The rule, which has been in place since 2014, requires that if an insurer learns a diagnosis submitted to CMS for payment lacks support in the beneficiary's medical record, the insurer must refund the payment within 60 days.

UnitedHealthcare had wanted the Supreme Court to review a 2021 federal appeals court decision that effectively restored the Medicare overpayment rule following a lower court's decision siding with the insurance giant.

In that case, presented to the United States Court of Appeals for the District of Columbia, UHC claimed the overpayment rule is subject to actuarial equivalence and that the rule fails to comply. Actuarial equivalence requires CMS to model a demographically and medically analogous beneficiary population in traditional Medicare to determine the lump sum payments to MA insurers. 

But the judge disagreed. Actuarial equivalence does not apply to the overpayment rule or the refund obligation, Judge Cornelia Pillard said at the time. Rather, actuarial equivalence appears in another statutory subchapter.

The Supreme Court denied UHC's appeal with comment.

UHC said in a statement that it would continue to comply with CMS rules and said it was proud of its efforts "to bring greater clarity to the rules governing the growing and successful Medicare Advantage program."

WHAT'S THE IMPACT?

The overpayment rule is part of the government's ongoing effort to trim unnecessary costs from the Medicare Advantage program, Pillard said last year.

About 40% of people on Medicare have a private Medicare Advantage plan. CMS pays these plans a lump sum per capita amount each month.

Overpayment to Medicare Advantage insurers is a serious drain on the Medicare program's finances, Pillard said. In 2016 alone, audits of the data submitted by Medicare Advantage insurers to CMS showed that CMS paid out an estimated $16.2 billion for unsupported diagnoses, equal to "nearly ten cents of every dollar paid to Medicare Advantage organizations."

THE LARGER TREND

Payments to the Medicare Advantage program depend on participating insurers accurately reporting to CMS their beneficiaries' salient demographic information and medically documented diagnosis codes. To better control erroneous payments, including those garnered from reported – but unsupported – diagnoses, Congress in 2010 amended the Medicare program's data-integrity provisions. 

The amendment specified a 60-day deadline for reporting and returning identified overpayments and confirmed that such payments not promptly returned may trigger liability under the False Claims Act. CMS promulgated the Overpayment Rule to implement those controls on Medicare Advantage.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com