The Supreme Court declined to hear a major lawsuit that insurance giant UnitedHealth filed challenging a Medicare Advantage overpayment rule.
The court announced the finding as part of a series of orders released Tuesday. The decision deals a major blow to UnitedHealth, which has argued the federal government doesn’t have the authority to collect overpayments to MA plans in the rule.
The Supreme Court, as is custom, did not give a reason for not taking up the lawsuit, which was originally filed back in 2016.
The Centers for Medicare & Medicaid Services’ (CMS') overpayments rule, first finalized back in 2014, requires MA plans to report and turn over any overpayments it gets from Medicare after analyzing their beneficiary health status. The rule also said that any diagnosis submitted by an MA plan for a payment must have supporting medical documentation or else it would be deemed an overpayment.
A lower court in 2018 fully vacated the overpayment rule, arguing it violated Medicare’s statute for “actuarial equivalence” with traditional Medicare. Normally, payments for both fee-for-service Medicare and MA are set annually based on costs from unaudited Medicare data, but the rule threw that out of balance, because the MA payments were set based on audited patient records.
CMS appealed the ruling in 2018, and, in August 2021, the U.S. Court of Appeals for the District of Columbia sided with the agency against UnitedHealth.
The appellate court didn’t find that the rule violated Medicare’s actuarial equivalence requirement. The court found that nothing in the Medicare statute requires actuarial equivalence be applied to overpayments or refunds.
Neither does anything in the rule require MA plans to audit its reported data, only requiring that insurers refund amounts that they knew were an overpayment and that lack supporting documentation, the court’s ruling said.
The ruling comes amid increased scrutiny of spending in the MA program. Recent estimates have shown that Medicare overpaid MA plans by $7 billion in 2019, and lawmakers have criticized certain practices such as up-coding that have driven up bonus payments to plans.