U.S. appeals court overturns Medicare overpayment


Aug 13 - An U.S. appeals court revived a rule that requires private insurers that administer federally funded Medicare plans to return potentially billions of dollars in overpayments they receive based on incorrect diagnoses.

The unanimous decision by a committee of D.C. judges was unanimous. Circuit Court of Appeals in Washington was a setback for UnitedHealth Group Inc, which challenged the rule in a lower court successfully.

UnitedHealth did not immediately respond to a request for comment. Nor did the U.S. Department of Health and Human ServicesU.S. Department of Health and Human Services, which oversees Medicare, the federal health insurance plan for seniors and certain people with disabilities.

The 2014 Rule applies to so-called Medicare Advantage insurance plans, administered through HHS, but funded by private insurers like UnitedHealth.

HHS pays Medicare Advantage plans a base amount per beneficiary, adjusted according to diagnostic codes reflecting each beneficiary's individual risk factors.

Under the rule, if a Medicare Advantage insurer learns that it received a payment based on an unsupported diagnosis, it must return this payment within 60 days.

According to a 2016 federal audit, the government paid out about $16.2 billion in that year on non-supported diagnoses, nearly 10% of the total paid to Medicare Advantage insurers.

In its 2016 lawsuit, UnitedHealth argued that Medicare Advantage is treated differently from traditional Medicare, which pays providers on a fee-for-service basis and does not comprehensively audit claims for overpayments. The insurer said the difference ran afoul of traditional Medicare law's requirement of actuarial equivalence between Medicare Advantage and Medicare Advantage.

In 2018, U.S. District Judge Rosemary Collyer in Washington overturned the rule.

Circuit Judge Cornelia Pillard wrote to the appeals court panel however Friday that there was no basis to conclude that Congress intended the actuarial equivalence requirement to thwart insurers' obligation of returns overpayments.