Supreme Court rejects UnitedHealthcare appeal of Medicare Advantage overpayment rule

On June 21, the U.S. Supreme Court declined to hear UnitedHealthcare's appeal of a CMS rule meant to recoup Medicare Advantage overpayments from payers.

The federal rule, first implemented in 2014, requires a payer to refund payments to CMS within 60 days if it learns a diagnosis lacks medical record support. The argument stems from whether CMS must ensure there is actuarial equivalence between Medicare Advantage payments and traditional fee-for-service Medicare payments.

In August, a Washington, D.C., appeals court reversed a 2018 decision that vacated the overpayment rule. In May, UnitedHealthcare appealed the decision before the Supreme Court, arguing the D.C. court made a "blatant" error when it found that "actuarial equivalence does not apply to the overpayment rule or the statutory overpayment refund obligation under which it was promulgated."

The payer also argued that the federal argument failed to provide a valid defense of the rule and largely ignored big players in the healthcare industry who say Medicare Advantage will be negatively affected by the rule.

The Biden administration had asked the Supreme Court to reject the appeal following HHS audits that found more than 40 percent of the risk scores in two separate UnitedHealthcare plans were not correct because of unsupported diagnoses. The estimated effect on payments from those two contracts was over $500 million, according to Bloomberg.

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