Federal appeals court sides with HHS in spat over Medicare Advantage overpayment rule

Wooden gavel and gold legal scale that appear to have sunlight falling on them
A federal appeals court has issued the latest ruling in an ongoing legal fight over Medicare Advantage overpayments. (Getty Images/William_Potter)

UnitedHealthcare has lost an appeal in a case over Medicare Advantage overpayments.

The health insurance giant initially won in lower federal court, but the Department of Health and Human Services filed an appeal in spring 2020. The ruling is the latest in the legal back-and-forth over a 2014 proposed rule that could change how much money MA plans have to pay the feds for diagnostic errors.

The Centers for Medicare & Medicaid Services' rule would require MA plans to the government in less than 60 days following identification, or they could be in violation of the False Claims Act.

UnitedHealthcare challenged the rule in 2016, arguing traditional Medicare pays out claims even if they're inaccurate.

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A lower court ruled in 2018 that the regulation violated federal law, but the appeals court tossed that decision, determining that the feds have never "treated an unsupported diagnosis … as valid grounds for payment" in MA.

The lower court determined the rule could lead MA plans to be paid less for certain conditions.

The ongoing legal spat comes as the federal government has worked to crack down on fraud and abuse in MA, a market that has become increasingly lucrative and attractive for private payers.