News: CMS rule restored requiring insurers to return Medicare Advantage overpayments

Private healthcare insurers who administer Medicare Advantage plans will have to repay overpayments they receive in spite of incorrect diagnoses, according to a Washington, D.C. Circuit Court of Appeals which unanimously reversed a previous lower-court ruling .

“The Overpayment Rule is part of the government’s ongoing effort to trim unnecessary costs from the Medicare Advantage program. Neither Congress nor CMS has ever treated an unsupported diagnosis for a beneficiary as valid grounds for payment to a Medicare Advantage insurer,” U.S. Circuit Judge Cornelia T.L. Pillard wrote. “Consistent with that approach, the Overpayment Rule requires that, if an insurer learns a diagnosis it submitted to CMS for payment lacks support in the beneficiary’s medical record, the insurer must refund that payment within sixty days. The Rule couldn’t be simpler.”

UnitedHealthcare, the appellee in the matter, “claims that it is unambiguous in the text of the Medicare statute that the Overpayment Rule is subject to a principle of ‘actuarial equivalence,’ and that the Rule fails to comply. But actuarial equivalence does not apply to the Overpayment Rule, or the statutory overpayment-refund obligation under which it was promulgated,” Pillard wrote. “Reference to actuarial equivalence appears in a different statutory subchapter from the requirement to refund overpayments, and neither provision cross-references the other. Further, the actuarial-equivalence requirement and the overpayment-refund obligation serve different ends. The role of the actuarial-equivalence provision is to require CMS to model a demographically and medically analogous beneficiary population in traditional Medicare to determine the prospective lump-sum payments to Medicare Advantage insurers. The Overpayment Rule, in contrast, applies after the fact to require Medicare Advantage insurers to refund any payment increment they obtained based on a diagnosis they know lacks support in their beneficiaries’ medical records.”

Neither UnitedHealthcare nor the HHS has yet to comment on the decision.

Editor’s note: Judge Cornelia T.L. Pillard’s opinion on the decision can be found here.