Trump Administration Appeals Medicare Regulation Ruling
Background on the Appeal
The Trump administration is poised to persist in its legal contest against a regulation established during the Biden administration, which intends to audit Medicare Advantage (MA) plans and recover billions in overpayments. In a recent filing on Friday, the federal government revealed its plan to appeal a September decision that invalidated the Medicare Risk Adjustment Data Validation (RADV) rule, citing violations of the Administrative Procedures Act. This appeal will be presented to the Fifth Circuit Court of Appeals, as regulators prepare to enhance efforts to tackle overpayments in the MA sector with plans to increase audits in the upcoming spring.
Details of the RADV Rule
The RADV rule, finalized in early 2023, aimed to authorize the Centers for Medicare & Medicaid Services (CMS) to sample MA beneficiaries in order to identify cases where insurers may have inflated diagnoses to obtain higher reimbursements. The CMS could then apply findings from this sample across an entire MA contract, facilitating the recovery of overpayments. Initially, the federal government estimated that this rule could recover around $4.7 billion from insurers over a decade.
Legal Challenges from Humana
Humana, one of the largest MA insurers in the United States, initiated a lawsuit against the Department of Health and Human Services (HHS) in September 2023. The company contested the removal of a “fee-for-service adjuster,” which was intended to ensure that payments to MA beneficiaries aligned with those of traditional Medicare on a per-enrollee basis. Humana argued that the elimination of this adjuster would result in underpayment of MA plans and contended that the CMS did not provide adequate notice regarding the adjustment’s removal from the final rule.
Judicial Ruling and Next Steps
In a significant ruling for MA payers, Judge Reed O’Connor of Texas’ Northern District ruled in favor of Humana, vacating the RADV rule. In response, the CMS is appealing this decision to the Fifth Circuit Court of Appeals. The recent filing did not outline the specific grounds for the agency’s challenge. A spokesperson for the CMS noted that the agency would not comment on ongoing litigation.
Concerns Over MA Overpayments
Overpayments within the MA program continue to be a pressing concern for regulators. A report from the congressional advisory group MedPAC, published in March, indicated that Medicare is expected to spend $84 billion more on MA enrollees this year compared to traditional fee-for-service beneficiaries. This disparity is largely due to the selection of healthier enrollees and increased coding intensity. CMS Administrator Dr. Mehmet Oz has reiterated the agency’s commitment to thoroughly investigating overpayments in the MA program. This spring, the CMS announced plans to significantly enhance its auditing capabilities and address a backlog of reviews from previous years.