New Ruling Has Major Overpayment Implications for MAOs

Nearly three years ago, a federal court’s ruling in support of UnitedHealth Group threw a seemingly definitive wrench into CMS’s plans to begin recouping self-identified overpayments from Medicare Advantage insurers. But in a major blow to the leading MA organization and the industry at large, a federal appellate court last week reversed that decision. While this could allow CMS to finally dive into a backlog of overpayments from plans, experts say the ruling may not be the final word on overpayment and that there are some to-be-determined aspects in play.

In an Aug. 13 opinion from the U.S. Court of Appeals for the District of Columbia Circuit, three judges reversed a 2018 ruling in a UnitedHealth lawsuit that challenged CMS’s 2014 Overpayment Rule. CMS in that final rule clarified the statutory definition of overpayment and codified provisions of the Affordable Care Act that required MA organizations to return identified overpayments within 60 days. UnitedHealth in January 2016 filed a complaint against the federal government and alleged that it violated the ACA’s statutory mandate of “actuarial equivalence” by asking sponsors to return overpayments based on audited records while the methods used to determine MA payment rates prior to risk adjustment are based on unaudited records of fee-for-service (FFS) Medicare transactions.

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