UnitedHealth sues feds over Medicare Advantage overpayment rule

UnitedHealthcare and 40 other affiliated companies have sued the federal government in an attempt to change what they argue are unfair regulations governing Medicare Advantage overpayments.

To ensure health plans are appropriately compensated for covering Medicare beneficiaries, the Centers for Medicare & Medicaid Services (CMS) is supposed to conduct a "true apples-to-apples comparison" of the health status of traditional fee-for-service Medicare beneficiaries with those in MA plans, according to the suit, UnitedHealthcare Ins. Co. v. Burwell.

Instead, the plaintiffs say, CMS requires plans to report and return MA overpayments based on an analysis of its members' health status that is "wholly inconsistent" with how it assesses Medicare fee-for-service beneficiaries.

Specifically, CMS requires that health plans withdraw previously submitted diagnostic codes when a plan has determined, or should have determined, that a diagnostic code is not properly documented in the underlying medical chart, categorizing its absence as overpayment. But when it assesses the health status of traditional Medicare beneficiaries, CMS makes no effort to corroborate diagnostic codes with medical charts, the suit points out.

Physicians and their staff are not always adept at coding and documentation for Medicare patients, so it is common that they will submit diagnostic codes that aren't documented in a patient's medical chart, the suit adds.

The plaintiffs argue the approach leads CMS to conclude that MA patients were less costly to insure than identically situated traditional Medicare beneficiaries and causing "systemic unlawful and unfair underpayment of Medicare Advantage plans." What's more, they say, the rule means that plans that most thoroughly review their provider-submitted codes will end up being the most underpaid.

UnitedHealthcare and its affiliates are not the only entities to take issue with how CMS handles payments to MA plans. A recent analysis from Avalere Health concluded that CMS' risk-adjustment model under-predicts costs for beneficiaries with chronic conditions by $2.6 billion annually. America's Health Insurance Plans, too, is lobbying against federal policies it says hurts MA plans and patients.

To learn more:
- here's the lawsuit

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