Humana weighing challenge to MA risk adjustment rule, CEO says

Humana CEO Bruce Broussard said Wednesday that the insurer is weighing its options on challenging a newly finalized regulation governing risk adjustment in Medicare Advantage.

The Centers for Medicare & Medicaid Services (CMS) finalized the rule Monday after years of pushback from the industry dating back to its reveal in 2018. While CMS did grant a concession to insurers in agreeing not to backdate audits beyond 2018, it determined that audits can be conducted without the need for a "fee-for-service adjuster," which payers argue is necessary to account for errors in data from traditional Medicare.

Broussard said on the company's earnings call that Humana is still reviewing the rule but said it was "disappointed" to see the adjuster excluded in the final regulation.

"We are considering all of our options to address or challenge this omission and to obtain clarity about our compliance obligations," he said.

When the audits get underway, experts said CMS could claw back nearly $5 billion in payments from Medicare Advantage plans.

Broussard added that Humana is also concerned by the lack of specifics on audit methodology included in the rule. He said it "did not provide the details needed to fully understand the potential impact of future audits," and that the company is looking forward to working with CMS to learn more about its thinking on contract selection, sampling and extrapolation.

Broussard did praise CMS' decision to not issue penalties on audits prior to 2018, which have not yet been conducted.

Humana Chief Financial Officer Susan Diamond hinted at a strong response from the industry in comments at the J.P. Morgan Healthcare Conference last month. She said if the fee-for-service adjuster was not included, litigation from the industry was likely to follow.

AHIP, the industry's main lobbying organization, issued a statement late Monday calling the regulation "unlawful."

"Our view remains unchanged: This rule is unlawful and fatally flawed, and it should have been withdrawn instead of finalized," CEO Matt Eyles said in the statement. "The rule will hurt seniors, reduce health equity, and discriminate against those who need care the most."