RISE reviews recent headlines that have an impact on Medicare, Medicare Advantage, and Medicaid.

UnitedHealth loses appeal over MA overpayment rule

A U.S. appeals court last week ruled against UnitedHealthcare and overturned a 2018 district court decision that had vacated the Center for Medicare & Medicaid Services’ (CMS) Medicare Advantage (MA) Overpayment Rule.

The 2014 overpayment rule required MA insurers to return overpayments based on incorrect diagnoses to CMS within 60 days of identifying them. Failure to do so would violate the False Claims Act and potentially be subject to civil penalties, treble damages, and other penalties.

The rule was meant to combat fraud, but in 2016 UnitedHealthcare sued CMS, claiming the rule treated MA differently from Medicare fee-for-service, a violation of a statute that requires equitable or the “actuarial equivalence” between CMS payments for health care coverage under MA and traditional Medicare. The insurer argued that the traditional Medicare program is not subject to audits as are MA plans, which shows the MA plans are held to a higher standard than original Medicare.

UnitedHealth scored a major win in 2018 when a federal judge determined that the MA overpayment rule was not equitable to Medicare and MA insurers. But the U.S. States Court of Appeals for the District of Columbia Circuit on August 13 reversed the district court decision and ruled that the overpayment rule doesn’t violate Medicare statute’s “actuarial equivalence” and “same methodology” requirements and is not arbitrary and capricious as an unexplained departure from prior policy.

 There is no legal or factual basis for UnitedHealth’s claim, the appellate court said. “Actuarial equivalence is a directive to CMS. It describes the goal of the risk-adjustment model Congress directed CMS to develop,” D.C. Circuit Judge Cornelia T.L. Pillard wrote in the decision.

“It does not separately apply to the requirement that Medicare Advantage insurers avoid known error in their payment requests. It assuredly does not unambiguously demand that, before CMS can collect known overpayments from Medicare Advantage insurers, it must engage in unprecedented self-auditing to eliminate an imagined bias in the body of traditional Medicare data CMS used in its regressions. The implausibility that Congress would have so intended is underscored by the lack of parallelism between the context and effects of, on one hand, unsupported diagnoses in the traditional Medicare data CMS uses to model generally applicable risk factors and, on the other, the specific errors the Overpayment Rule targets.”

Business group sues HHS to stop insurer price transparency rule

The U.S. Chamber of Commerce filed suit last week to block the Department of Health & Human Services’ (HHS) enforcement of a Trump administration regulation to increase health insurance plan price transparency.

The Chamber of Commerce of the United States of America and the Tyler Area Chamber of Commerce are seeking declaratory and injunctive relief against the HHS, the Centers for Medicare & Medicaid Services, the Department of Labor, the Employee Benefits Security Administration, the Department of the Treasury, and the Internal Revenue Service. They argue that the provisions will drive up the costs that patients and health plans will pay for health care. The provisions, the suit said, are improper, insufficiently reasoned, and exceeds HHS authority.

RELATED: Feds propose price transparency rule for health insurers

The Transparency in Coverage rule will require nearly all health insurers and self-insured plans to comply with the provisions. The requirements are incremental for plans that start on or after Jan. 1, 2022, through Jan. 1, 2024. For plans beginning on or after Jan. 1, 2023, the provisions will require insurers to provide 500 shoppable services in an internet-based consumer-friendly format. The following year, the requirement will expand to all services for plans that start on or after Jan. 1, 2024.

The Chamber’s lawsuit addresses the rule’s requirement that insurers post on their websites a host of internal pricing data in three “machine-readable files” or data files, including an in-network rate file with the rates they negotiated with providers, an allowed out-of-network amount file, and a prescription drug rate file. The rule requires the information be made available to consumers in plain language, but the lawsuit argues that the machine-readable requirements make this impossible. The content of the files is not readily understandable by the average consumer.

“The machine-readable-file requirement forces plans, including self-funded plans, to disclose vast amounts of highly technical pricing data in a ‘digital representation’ designed to be readable by a computer, instead of plain language designed to be accessible to individual patients and consumers. Because that complicated, unwieldy format cannot be reconciled with Congress’s command that disclosures be made in plain language, the machine-readable-file requirements violate the law and must be set aside,” the lawsuit said.

Compliance with the challenged provisions of the rule will cost billions of dollars in the first year of implementation, according to the lawsuit, and hundreds of millions of dollars each year going forward.

KFF analysis: Payments to MA plans boosted Medicare spending by $7B in 2019

The federal government spent $321 more per person for beneficiaries enrolled in MA plans than for those in traditional Medicare in 2019, a gap that amounted to $7 billion in additional spending, according to a new analysis from the Kaiser Family Foundation (KFF).

The MA spending includes the cost of extra benefits, such as vision, dental, and hearing coverage that are funded by rebates and not covered for beneficiaries in traditional Medicare. The extra benefits have likely contributed to years of steady increases in MA enrollment, which reached 22 million in 2019 (36 percent of all beneficiaries) and 26 million this year (42 percent), KFF said in the study announcement.

At the same time, MA spending has risen steadily, and is projected to rise to $664 billion by 2029, up from $348 billion this year. Half of the projected increase is due to growth in enrollment, while the remaining half is attributable to growth in federal payments per enrollee after accounting for inflation. The projected growth in spending per MA enrollee is driven in part by the expectation that federal bonus payments that plans receive based on their quality ratings will continue to rise.

The higher payments for MA—$11,844 per person in MA vs. $11,523 in traditional Medicare in 2019— have led to higher federal spending than would have occurred under traditional Medicare and higher Medicare Part B premiums paid by all beneficiaries, including those in traditional Medicare.

The higher spending is attributed to features of the MA payment system, including how benchmarks for plan payments are set, as well as the risk adjustment process, which is intended to compensate plans more for higher cost enrollees. The new KFF analysis finds that if spending per MA enrollee were 2 percent less each year than the amount projected by the Medicare actuaries—a scenario similar to a recommendation made by the federal Medicare Payment Advisory Commission (MedPAC)—then total Medicare spending would be $82 billion lower than projected between 2021 and 2029.

Under a different scenario, if the growth in per person spending on beneficiaries in MA were held to the same rate of growth in spending on beneficiaries in traditional Medicare, then total Medicare program spending would be $183 billion lower than projected between 2021 and 2029, the analysis finds.

UnitedHealth to pay $15.6M to settle Mental Health Parity, Addiction Equity Act violations

The United States Department of Labor announced that United Behavioral Health and United Healthcare Insurance Co. will pay $15.6 million and take corrective actions after a federal investigation found they illegally denied coverage to beneficiaries for mental health and substance abuse disorder treatment.

The organizations will pay $13.6 million to affected participants and beneficiaries as well as $2,084,249 in penalties.

According to the settlement announcement, United reduced reimbursement rates for out-of-network mental health services, thereby overcharging participants for those services, and flagged participants undergoing mental health treatments for a utilization review, resulting in many denials of payment for those services. The allegations go back to at least 2013, according to the Department of Labor.

United’s action violated the Mental Health Parity and Addiction Equity Act of 2008, which prohibits Employee Retirement Income Security Act (ERISA)-covered health plans from imposing treatment limitations on mental health and substance use disorder benefits that are more restrictive than the treatment limitations they impose on medical and surgical benefits.

Many participants and beneficiaries did not receive the mental health and substance use benefits to which they were entitled under their ERISA-covered health plans due to United’s violations. Investigators also found United failed to disclose sufficient information about these practices to plans and their participants and beneficiaries. In the settlement, United agrees to cease the violations, improve its disclosures to plan participants, and commit to future compliance.