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UnitedHealthcare Loses Medicare Overpayment Rule Challenge (1)

Aug. 13, 2021, 4:15 PMUpdated: Aug. 13, 2021, 5:27 PM

A rule requiring Medicare Advantage private insurers to repay overpayments was upheld by the D.C. Circuit on Friday, reversing a win for UnitedHealthcare Insurance Co. in a decision that could lead to more False Claims Act lawsuits.

The “actuarial equivalence” requirement—found in a different part of the Medicare law than the overpayment provision—doesn’t apply to the Centers for Medicare and Medicaid Service’s overpayment rule, the U.S. Court of Appeals for the D.C. Circuit said.

The requirement only directs the agency to reimburse MA plans at about the same rates as traditional Medicare providers, the court said. It doesn’t refer to the overpayment rule or the statutory overpayment obligation, it said.

UnitedHealthcare Insurance Co. and other MA plans’ compliance with the overpayment rule also isn’t excused by the “same methodology” requirement, the court said.

Under this requirement, CMS must compute and publish certain traditional Medicare data every year “using the same methodology as is expected to be applied in making payments” to MA insurers, the court said.

But this requirement “merely clarifies” that CMS must use the same risk-adjustment model for both, the court said. It doesn’t say anything about what constitutes an overpayment, it said.

Medicare traditionally pays for medical services for people over 65, but about 40% of those eligible have elected to have their health insurance paid for through MA plans instead. These plans are offered by private insurers that receive reimbursement from CMS in a prospective lump sum every month.

Plans must accurately report their clients’ demographic information and diagnoses to CMS. In 2010, Congress amended the Medicare Act to require them to return and report any identified overpayments within 60 days or face False Claims Act liability. The overpayment rule implements that section.

A federal trial court agreed with UnitedHealthcare that the overpayment rule is subject to both the actuarial equivalence and same methodology requirements. The D.C. Circuit reversed.

The actuarial equivalence and overpayment provisions appear in different sections of the statute that don’t cross-reference each other, the D.C. Circuit said in an opinion by Judge Cornelia T.L. Pillard.

The provisions also have different goals, the court said. The actuarial equivalence provision applies before the fact and directs CMS on how to determine prospective lump sum payments to MA plans, it said. The overpayment rule applies to MA plans by requiring them to return known overpayments, it said.

Judges Judith W. Rogers and Justin R. Walker joined.

The U.S. Department of Justice represents CMS. Latham & Watkins LLP represents UnitedHealthcare.

The case is UnitedHealthcare Ins. Co. v. Becerra, D.C. Cir., No. 18-5326, 8/13/21.

(Updates with additional information in first three paragraphs.)

To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com