Court will let UnitedHealth sue CMS over Medicare Advantage rule

gavel and books
Judge Rosemary M. Collyer ruled Friday that UnitedHealth can sue CMS over its Medicare Advantage overpayment rule.

UnitedHealth, which is embroiled in lawsuits alleging it fraudulently inflated its Medicare Advantage risk scores, will be allowed to go forward with a separate court case in which it is challenging the government regulations for MA overpayments.

United and 40 of its affiliate companies filed their suit early last year. On Friday, federal judge Rosemary M. Collyer ruled that the insurers have standing to sue the Centers for Medicare & Medicaid Services.

At issue in the case is a federal rule finalized in May 2014, which was intended to clarify the statutory definition of overpayment after the Affordable Care Act mandated that an insurer would be violating the False Claims Act if it failed to return an overpayment within 60 days of identifying it.

The CMS uses health history data—which relies on diagnostic codes submitted by the healthcare providers to MA insurers—to adjust its baseline payments to health plans so they are compensated in accordance with their members’ actuarial risk.

The rule in question requires that MA 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 patients’ medical charts, categorizing its absence as overpayment.

But when it assesses the health status of traditional Medicare beneficiaries, the CMS makes no effort to corroborate diagnostic codes with medical charts, the suit argued. Thus, the CMS will systematically underpay for beneficiaries’ care to MA insurer plans compared to payments if that same beneficiary were in a traditional Medicare plan, United alleged.

Collyer’s ruling that the case can go forward comes on the heels of the news that the Justice Department has elected to intervene in a whistleblower case that accuses United of conducting biased retrospective reviews of medical records aimed at boosting its MA reimbursement.

The DOJ is seeking to consolidate that case with another suit it recently joined, brought by whistleblower James Swoben, which makes similar accusations against United.

In fact, Collyer noted in her opinion that the government tried to use the Swoben case to argue that its overpayment rule simply restated established obligations, so it did not harm United. But the judge disagreed, writing that "Swoben is not the droid the [HHS] secretary is looking for."

Meanwhile, in another filing related to the Swoben case, the DOJ also revealed it is investigating Aetna, Humana, Health Net and a division of Cigna called Bravo Health’s risk adjustment.

Editor's note: This article has been updated to add additional information from the court's opinion.

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