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UnitedHealthcare wins first round in MA payments case, readies lawsuit against HHS

Insurer says CMS violated the law's requirement that Medicare Advantage insurers be subject to the same actuarial standards as Medicare.

Susan Morse, Senior Editor

UnitedHealthcare may bring a lawsuit against the Department of Health and Human Services over Medicare Advantage payments, United States District Court Judge Rosemary Collyer ruled on Friday.

The judge denied a request by Health and Human Services to dismiss the case. The court did not determine the merits of the case, only that the insurer has standing to pursue it.

The lawsuit was brought under a collection of insurers operating under UnitedHealthcare Insurance Company umbrella.

UnitedHealthcare contends that a Centers for Medicare and Medicaid Services rule violates the law's requirement that Medicare Advantage insurers be subject to the same actuarial standards as Medicare.

[Also: Court combines two whistleblower suits against UnitedHealth alleging Medicare Advantage fraud]

CMS subjects MA insurers to a more searching scrutiny than it applies to its own enrollee data, UnitedHealthcare said.

Medicare Advantage insurers are reimbursed by CMS on a per-beneficiary basis that the agency then adjusts based on the beneficiary health data. This data is obtained in the billing process by the insurer from provider diagnostic codes.

But error rates in these codes as high as 20 percent, UnitedHealthcare said. Insurers are not obligated to validate these diagnostic codes independently, it said.

The 2014 rule in the Affordable Care Act imposes an obligation on insurers to report and return overpayments that insurers discover on their own within 60 days, or face a violation of the False Claims Act.

UnitedHealthcare also objected to the standard of liability being the False Claims Act, rather than the lower standard of "recklessness."

UnitedHealthcare said the rule requiring Medicare Advantage insurers to confirm diagnostic codes through review of underlying medical charts -- while not conducting such reviews under Medicare -- will result in CMS systematically underpaying Medicare Advantage insurer plans compared to the payments made if that same beneficiary were in a traditional Medicare plan, according to court documents. 

Twitter: @SusanJMorse