{"id":2229,"date":"2018-12-04T06:00:17","date_gmt":"2018-12-04T12:00:17","guid":{"rendered":"http:\/\/blogs.luc.edu\/compliance\/?p=2229"},"modified":"2018-12-04T06:00:17","modified_gmt":"2018-12-04T12:00:17","slug":"d-c-district-court-vacates-cms-overpayment-rule-for-medicare-advantage-organizations","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=2229","title":{"rendered":"D.C. District Court Vacates CMS Overpayment Rule for Medicare Advantage Organizations"},"content":{"rendered":"

Yahitza Nu\u00f1ez<\/em><\/p>\n

Associate Editor <\/em><\/p>\n

Loyola University Chicago School of Law, LL.M. 2019<\/em><\/p>\n

On September 7, 2018, the United States District Court in the District of Columbia (\u201cD.C. District Court\u201d) vacated Medicare\u2019s overpayment \u201creport and return\u201d rule as applied to Medicare Advantage Organizations (\u201cMAOs\u201d). The Patient Protection and Affordable Care Act (PPACA) created the requirement to report and return overpayments. The Centers of Medicare and Medicaid (CMS) issued rules to provide definitions that the PPACA did not define, create a procedure, payment options and timeframes. MAOs may no longer need to comply with CMS\u2019 overpayment rule, but the PPACA remains intact. Providers who service Medicare beneficiaries will need to conduct the same analysis in order to comply with the PPACA \u201creport and return\u201d requirement.<\/p>\n

Overpayment Rule<\/strong><\/p>\n

Under the PPACA, MAOs are required to report and return overpayments within \u201c60 days after the date on which the overpayment is identified.\u201d The PPACA explicitly stated that failure to return an overpayment would cause the initial claim for payment a violation of the False Claims Act (FCA). The new report and return requirement left many terms undefined and in May 2014, CMS issued its final rule, 42 C.F.R. \u00a7422.326, addressing MAO overpayments (\u201cMAO overpayment rule\u201d).<\/p>\n

MAOs are private insurance companies that operate under Medicare Part C (\u201cPart C\u201d). The MAOs step into the shoes of CMS and provide beneficiaries services under Medicare Parts A and B, and in some instances under Part D. MAOs<\/a> are paid a \u201cpre-determined monthly sum for each person they cover, based in part upon the characteristics of the particular beneficiary being covered.\u201d The organization pays doctors, other healthcare providers, and hospitals for services provided. CMS reimburses the MAO on a per-member-per-month rate that has been determined in advance. The Social Security Act<\/a> requires CMS to ensure \u201cactuarial equivalence between traditional Medicare plans and MAOs.\u201d CMS must adjust the \u201cpayment amount for such risk factors as age, disability status, gender, institutional status, and such other factors as the Secretary determines as appropriate.\u201d<\/p>\n

UnitedHealth Group\u2019s family of companies brought suit against CMS regarding the MAO overpayment rule and its application under the FCA. On September 7, 2018, the United States District Court in the District of Columbia (\u201cD.C. District Court\u201d) determined<\/a> that the CMS\u2019 2014 final rule applicable to MAOs violated the Administrative Procedures Act. First, the court found that the MAO overpayment rule \u201cestablishes a system where actuarial equivalence cannot be achieved.\u201d The method in which CMS conducted the risk analysis was \u201cbuilt on unaudited data about traditional, fee-for-service Medicare beneficiaries, which must contain errors,\u201d and as a result the rate at which MAOs received payment was based on flawed data. Second, the Court<\/a> found that the MAO overpayment rule \u201cfails to recognize a crucial data mismatch and, without correction,\u201d it fails to compute expenditures for traditional Medicare in the same methodology as it expects to apply to Medicare Advantage payments. Third, \u201cCMS was arbitrary and capricious in adopting the [MAO overpayment rule] without explaining its departure from prior policy.\u201d Last, the MAO overpayment rule\u2019s definition of \u201cidentified\u201d was distinctly different than the proposed rule and did not provide adequate notice. Also, the negligence standard for failure to report and return overpayments in the MAO overpayment rule extends beyond the FCA and the PPACA, and CMS does not have the legislative authority to create a more stringent standard through regulations.<\/p>\n

Future of 60-Day Report and Return Rule<\/strong><\/p>\n

The D.C. District Court decision vacated the MAO overpayment rule and MAOs no longer need to comply with the MAO overpayment rule. However, this does not remove an MAOs duty to comply with PPACA. MAOs must report and return an overpayment, by the later of, 60 days after the overpayment is identified or when the corresponding cost report is due. The PPACA<\/a> defines an overpayment as \u201cany funds that a person receives or retains under [Medicare] or [Medicaid] to which the person, after appropriate reconciliation, is not entitled.\u201d Thus, MAOs must report any overpayment \u201cafter appropriate reconciliation\u201d within 60 days the overpayment is identified or the date the corresponding cost report is due, whichever is later.<\/p>\n

The time period to file an appeal<\/a> expired on November 7, 2018, and as of today, no appeal had been filed. Providers under Medicare Parts A, B and D must still comply with the \u201creport and return\u201d rules applicable to their programs. In 2016, CMS issued new overpayment rules that extended the application of the \u201creport and return\u201d requirement to providers under Medicare Parts A and B<\/a> and Parts C and D<\/a>. The rules provided definitions, process, payment options, and timeframes for debt collection process.<\/p>\n

To ensure compliance, whether services are provided under Parts A, B, C, or D, the provider should consider:<\/p>\n