Dive Brief:
- The Trump administration will continue to fight in court over a Biden-era regulation that would audit Medicare Advantage plans and claw back billions of dollars in overpayments.
- In a Friday filing, the federal government said it would appeal a judge’s decision from September that vacated the Medicare Risk Adjustment Data Validation, or RADV, rule for violating the Administrative Procedures Act.
- The move to take the case to the Fifth Circuit Court of Appeals comes as regulators have said they’ll crack down on MA overpayments, including through a plan this spring to increase audits.
Dive Insight:
The RADV rule, finalized in early 2023, would have allowed the CMS to take a sample of MA beneficiaries to find diagnoses suggesting an insurer was inflating their illnesses to receive increased reimbursement. The agency could then extrapolate based on that sample across an MA contract and claw back overpayments accordingly.
The federal government initially estimated the rule would have recouped $4.7 billion from insurers over 10 years.
But Humana, one of the nation’s largest MA payers, sued the HHS in September 2023. The insurer pointed to regulators’ decision to cut out a “fee-for-service adjuster,” which was meant to ensure that the CMS paid MA beneficiaries the same amount per enrollee that they would have paid for traditional Medicare.
Humana argued removing the adjuster would have allowed the CMS to underpay MA plans, and that the CMS hadn’t provided the industry adequate notice when it decided to cull the adjuster from the final rule.
Earlier this year, Judge Reed O’Connor of Texas’ Northern District agreed with Humana, vacating the rule in a significant win for MA payers.
Now, the CMS is appealing that ruling to the Fifth Circuit Court of Appeals. The filing Friday didn’t detail on what grounds the regulator would argue against the decision. A spokesperson for the agency said the CMS didn’t comment on litigation.
Overpayments in MA have continued to be a concern for regulators. Medicare will spend $84 billion more on MA enrollees this year than it would if those beneficiaries were in the traditional fee-for-service program, mostly due to favorable selection of healthier beneficiaries and coding intensity, according to a report by congressional advisory MedPAC published in March.
CMS Administrator Dr. Mehmet Oz has repeatedly pledged to more heavily scrutinize overpayments in the MA program. This spring, the agency said it would significantly expand its capacity to audit the plans and complete a backlog of reviews from earlier years.
