UnitedHealthcare Ins. Co. v. Becerra

UnitedHealthcare Ins. Co. v. Becerra

Opinion

 [*869]  Pillard, Circuit Judge: UnitedHealthcare Insurance Company and other Medicare Advantage insurers under the umbrella of UnitedHealth Group Incorporated (collectively, UnitedHealth) challenge a rule the Centers for Medicare and Medicaid Services (CMS) promulgated under the Medicare statute, 42 U.S.C. §§ 1301-1320d-8, 1395-1395hhh. The Overpayment Rule is part of the government's ongoing effort to trim unnecessary costs from the Medicare Advantage program. Neither Congress nor CMS has ever treated an unsupported diagnosis for a beneficiary as valid grounds [**2]  for payment to a Medicare Advantage insurer. ] Consistent with that approach, the Overpayment Rule requires that, if an insurer learns a diagnosis it submitted to CMS for payment lacks support in the beneficiary's medical record, the insurer must refund that payment within sixty days. The Rule couldn't be simpler. But understanding UnitedHealth's challenge requires a bit of context.

As explained in more detail below, people who are eligible for Medicare may elect to receive their health insurance through a private insurer under Medicare Advantage rather than directly through the government under traditional Medicare, and approximately forty percent of beneficiaries have chosen Medicare Advantage. CMS pays private Medicare Advantage insurers, in a prospective lump sum each month, the amount it expects a month's care would otherwise cost CMS in direct payments to healthcare providers treating the same beneficiaries under traditional Medicare. For each Medicare Advantage beneficiary, CMS pays the insurer a per-capita amount that varies according to demographic characteristics and diagnoses that CMS has determined, based on its past experience  [*870]  in traditional Medicare, to be predictive of [**3]  healthcare costs.

Payments to the Medicare Advantage program depend on participating insurers accurately reporting to CMS their beneficiaries' salient demographic information and medically documented diagnosis codes. To better control erroneous payments, including those garnered from reported—but unsupported—diagnoses, Congress in 2010 amended the Medicare program's data-integrity provisions. The amendment specified a sixty-day deadline for reporting and returning identified overpayments and confirmed that such payments not promptly returned may trigger liability under the False Claims Act. See id. § 1320a-7k(d). CMS promulgated the Overpayment Rule to implement those controls on Medicare Advantage. See 42 C.F.R. § 422.326. ] As relevant here, the Overpayment Rule establishes that, if a Medicare Advantage insurer has received a payment increment for a beneficiary's diagnosis and discovers that there is no basis for that payment in the underlying medical records, that is an overpayment that the insurer must correct by reporting it to CMS within sixty days for refund. See Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs, 79 Fed. Reg. 29,844, 29,921 (May 23, 2014) (hereinafter Overpayment Rule), J.A. 64.

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