Medicare Advantage groups back UnitedHealthcare’s bid to end overpayment rule

Payers, providers, and technology firms threw their support behind UnitedHealthcare’s effort to have the U. S Supreme Court eliminate a rule that leaves Medicare Advantage plans liable for False Claims Act violations if they do not return the billions they received in overpayments.

Overpayments occur when diagnostic codes sent to the Centers for Medicare and Medicaid Services for payment are not documented in a patient’s medical chart. Medicare Advantage plans must return overpayments to the federal government within 60 days of identifying them or they would be considered in violation of federal law and potentially subject to civil lawsuits, damages, and penalties.

The overpayment rule, introduced in 2014, was intended to curb upcoding and fraudulent billing. The Medicare Payment Advisory Commission estimated that in 2020 private plans’ exaggeration of patient conditions led the federal government to make excess payments to plans of about $12 billion.

UnitedHealthcare in February asked the high court to review the legality of the overpayment rule after the Court of Appeals for the District of Columbia last year reversed a lower federal court’s decision to vacate the rule.

Health insurance lobby AHIP, physician enablement vendor Agilon Health, America’s Physician Groups and the U.S. Chamber of Commerce submitted amicus briefs to the court last Friday, arguing the rule threatens the future of Medicare Advantage by underpaying health plans and unfairly subjecting private payers to more stringent standards than the traditional fee-for-service system.

“We are pleased that these reputable and diverse groups are supporting our efforts to help ensure that millions of seniors continue to receive quality care through the growing Medicare Advantage program,” a UnitedHealthcare spokesperson wrote in an email.

Lack of medical record documentation does not mean the patient does not have a condition–a provider simply could have failed to update the individuals’ chart, AHIP wrote in its amicus brief. The overpayment rule pegs Medicare Advantage reimbursement to imperfect data from the fee-for-service system, the health insurance lobby wrote.

“Because CMS developed its model using FFS data known to contain a significant rate of diagnosis codes that are not documented in medical records, it cannot require more stringent documentation of (Medicare Advantage organizations) without adjusting for that inconsistency,” AHIP said.

The rule threatens to reduce the flat fee CMS pays Medicare Advantage plans and providers for managing patients risk, which could lead organizations to reduce the number of benefits and treatment options available to the program’s 28 million beneficiaries, and cherry-pick patients, America’s Physician Groups wrote in its amicus brief. By 2025, more than half of all eligible Medicare enrollees will have enrolled in a Medicare Advantage plan.

“MA plans and providers facing greater risks and a reduced capitation stream have strong incentives to seek out healthier beneficiary populations to make up the difference,” the physician’s group wrote.

Because Medicare Advantage plans are paid the same as traditional Medicare to offer more benefits for members, private plans will see their reimbursement reduced to below traditional Medicare’s rates, giving the public program an upper hand, Agilon Health wrote in an amicus brief.

“Capitation presents both upside potential and downside risk,” the tech company said. “By effectively abandoning actuarial equivalence, CMS has sharply limited the upside while significantly expanding the downside.”

CMS has a conflict of interest in promoting regulations that reduce payment to Medicare Advantage plans, since money for the program comes out of the agency’s pocket and CMS’ traditional Medicare program competes with the private insurers’ plans, the U.S. Chamber of Commerce wrote in its amicus brief.

“In short, CMS wears two hats: rival and referee,” the business group said.

UnitedHealthcare is the largest Medicare Advantage insurer in the nation with 7.9 million enrollees.

Whistleblower lawsuits have criticized it and other insurers for allegedly combing patients’ medical charts to find and report all possible diagnoses to submit for additional Medicare payments, but not deleting codes they knew were inaccurate. Aetna, Humana, Kaiser Permanente and other insurers were all targeted by Medicare Advantage upcoding audits or lawsuits in 2021.

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